Both Haifa Chemicals Ltd. and Israel Chemicals Ltd. (TASE: ICL) subsidiary ICL Fertilizer unit Dead Sea Works have turned to the Antitrust Authority in their dispute over the price of potash that Haifa Chemicals buys from Israel Chemicals. In addition, following Friday's letter by Haifa Chemicals CEO Nadav Shachar to Prime Minister Benjamin Netanyahu and several ministers, Minister of Industry, Trade and Labor Benjamin Ben-Eliezer has launched a review of potash prices.
Sources inform ''Globes'' that Antitrust Authority director general Ronit Kan has also begun a probe. Kan declined to respond to questions by "Globes" on the matter.
Last week, Haifa Chemicals shut down its production lines at its plants in Haifa and at Mishor Rotem in the Negev. The company claims that it is losing money because of the high price for potash charged by Israel Chemicals. Although Haifa Chemicals' management is using employees as a bargaining chip, the workers committee is supporting management. Yesterday, Haifa Chemicals employees demonstrated against ICL Fertilizers.
Shachar is also trying to get the government to intervene and compel Israel Chemicals to lower the price of potash sold to Haifa Chemicals.
ICL Fertilizers president and CEO Dani Chen told "Globes" that, until now, Haifa Chemicals was happy to be the beneficiary of the price formula for potash bought from Israel Chemicals for decades. Under this formula, based on the export price of potash, Haifa Chemicals pays the Israel Chemicals' threshold export price, and does not pay related charges and export fees. Since the price of potash is updated every few months, Haifa Chemicals has always paid the previous year's price for potash, which is usually less than the current price.
Chen said, "So long as this was the situation, there were no complaints. The difference between the market price and the price paid by Haifa Chemicals resulted in the company making a profit of NIS 250 million in 2008. Haifa Chemicals knew that it would pay more in the first half of 2009, and we notified them in advance to have the money available."
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2009
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