"The company is worried that foreign investors will perceive Israel as a less attractive market for investment, because of uncertainty about the Israeli economic environment, and because they perceive the Israeli government as unreliable," Israel Chemicals Ltd. (TASE: ICL) spokesman Amir Avramovitz told "Globes" today.
Avramovitz added, "The key element is the government wish to increase the government's take from royalties and taxes. The story is that, a year ago, we signed with the state an agreement to double royalties to 10% and to finance the national project to save the Dead Sea hotels at a cost of NIS 10 billion."
18 months ago, the government doubled Israel Chemicals' royalties on potash sales above 1.5 million tons from 5% to 10%.
Avramovitz said, "We are asked by foreign investors to interpret all this, but we can't explain this conduct."
In late April, Potash Corporation of Saskatchewan Inc. (NYSE; TSX: POT) cancelled its intention to acquire Israel Chemicals, in response to muscle flexing by the Israeli government. In a statement, it said, "Over recent months, we have been exploring the possibility of expanding our ownership interests in Israel Chemicals. While we continue to believe that such a transaction would be of tremendous benefit to stakeholders of both companies and the State of Israel, there must be receptivity to foreign investment and certainty in the rules that govern such investment. We have therefore concluded that now is not the time to pursue this opportunity and will focus our energies on other options to maximize shareholder value."
Published by Globes [online], Israel business news - www.globes-online.com - on May 27, 2013
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