Israel Chemicals loses amid higher royalty rumours
Israel Chemicals (ICL:IT) slumped 4.62% on Monday on the Tel-Aviv Exchange, its lowest level since December 2011. The drop is attributed to a new Israeli government panel that will likely recommend higher royalty payments and taxes for the resource sector.
The committee formation is not welcome news for the industry. The head of the panel, Eitan Sheshinksi, was responsible for increasing royalty payments for the petroleum industry in 2011.
Israel Chemicals Ltd. is the world's sixth largest potash producer, operating in Israel's portion of the Dead Sea with exclusive mining rights.
Israel Corp. (ILCO:TLV), a 52% stakeholder of Israel Chemicals, saw a 6.3% decrease today.
Yair Lapid, Israel's finance minister, formed the committee several months after expressing his displeasure over plans by Potash Corp. (POT:NYSE), a Canadian company, to buy out the Israeli producer.
Potash Corp. is the world's largest producer of potash and owns 14% of Israel Chemicals. The company dropped its Israeli plans in March due to government and public opposition.
Investors are fearing what Israeli media call the 'Sheshinksi effect' – when the oil and gas panel released its recommendations in 2010, many Israeli petroleum companies saw market losses. The economics professor recommended increasing taxes and the portion of revenue the government takes. The bill passed with minor adjustments.
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