Israel Chemicals Ltd. (TASE: ICL) board of directors has instructed the company's management to prepare to close its magnesium plant by January 1 2017 because, "as discussions stand with the government on tax and royalties issues, it will not allow continued operations of the plant."
Company management was instructed to ensure continued implementation of orders and commitments, both existing and in the future, so as to prevent disruptions of work in the factory before the date of its closure.
Israel Chemicals stressed that, "the main economic justification for continued operations of the magnesium factory at the Dead Sea stems from the plant's synergy with the company's other installations in Sedom, which supply raw materials to nearby factories. The net value of the synergy has been lowered as a result of the current heavy tax burden on quarrying production in Israel, and this will become even heavier due to the interim recommendations for legislation contained in the Sheshinski Committee."
As a consequence of these recommendations, Israel Chemicals has already stopped all investment in the magnesium factory.
Magnesium sales in 2013 amounted to $115 million with about $1 million gross profit for the Dead Sea Magnesium factory.
The Dead Sea Bromide workers committee has vowed to fight the decision and claims that the company's controlling shareholder Idan Ofer has lost his touch and wants to move to London and sell off a lean Israel Chemicals.
Israel Chemicals board of directors has also instructed the management of Dead Sea Bromide to formulate and implement a streamlining plan to improve profitability due to falling demand for fire retardants, slow global growth, falling prices, the strength of the shekel and proposals to raise government royalties on products.
Published by Globes [online], Israel business news - www.globes-online.com - on August 28, 2014
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