Israel cabinet approves ICL's Dead Sea salt extraction

Reuters News
Posted: Jan 01, 2012 11:13 AM
Israel cabinet approves ICL's Dead Sea salt extraction

JERUSALEM (Reuters) - Israel's cabinet on Sunday overwhelmingly approved a Finance Ministry plan in which Israel Chemicals (ICL) will pay 3.04 billion shekels ($796 million) to extract salt buildup on the Dead Sea floor and to double the royalties it pays on minerals extracted from the area.

Ministers voted 21-2 in favor of the plan, the ministry said in a statement.

A deal reached last week between the two sides ended months of negotiations after the Israeli government insisted ICL fund the clear-up, saying the group responsible for the build-up -- through the evaporation caused by mineral extraction -- should foot the bill.

The project could cut deep into the profits of the company, the second-largest traded in Tel Aviv and one of the world's major potash producers. The Israeli government will foot an additional 760 million shekels to complete the salt harvest.

ICL shares closed 0.5 percent lower at 39.30 shekels, compared with gains of 1.1 percent on the broader Tel Aviv bourse.

The salt harvest project will not tackle the bigger problem of poor water management that has caused the Dead Sea, a favorite spot for tourists who enjoy floating in its densely salted waters, to shrink by a third in the past 50 years.

($1 = 3.82 shekels)

(Reporting by Steven Scheer; Editing by Ruth Pitchford)