State should include stricter requirements in new tender to mine Dead Sea — lawyers
Responding to draft tender, Adam Teva V’Din says Dead Sea Works must pay for environmental damage, state needs to reserve a percentage of profits to stop sea’s decline
Sue Surkes is The Times of Israel's environment reporter
The state should include stricter requirements in the tender it issues for extracting minerals from the Dead Sea to protect the environment, environmental law experts said this week.
This should include forcing the current and future concessionaires to repair environmental damage at their own cost, and creating a fund from part of the profits to help stabilize or reduce the shrinking of the sea, should a viable solution emerge.
In September, the Finance Ministry, the Environmental Protection Ministry, and the Tax Authority released for public comment a draft franchise for the Dead Sea Works, whose current franchise runs out in 2030.
The franchise is currently held by ICL Group, formerly Israel Chemicals Ltd., a subsidiary of the Ofer family’s Israel Corporation, the country’s largest holding company.
Nationalized in 1951, the Dead Sea Works concern grew out of a private potash factory established at the Dead Sea in 1930. In 1961, the Knesset granted the plant exclusive rights for the next 69 years to mine a large portion of the Dead Sea, primarily for potassium-rich potash, a key ingredient in fertilizers, and to use much of the surrounding area for its operations.
According to a media briefing in September, between 53 and 64 percent of ICL’s total operating profitability comes from the Dead Sea Works, where average annual operating profits between 2017 and 2023 totaled $690 million to $830 million.
In response this week to the draft tender, Adam Teva V’Din drew attention to the environmental damage caused by ICL’s activities, which range from mining sand to building sandbanks and dumping excess salt in massive piles to abandoning infrastructure no longer needed as the sea recedes.
Adam Teva V’Din argued the statement in the draft tender that said it would be “fitting” for ICL to pay to rectify the damages is insufficient, and that the company’s expected bid for the new franchise should be conditioned upon its commitment either to repair the damage by 2028 at the latest, or to deposit the cash to do so after 2030.
The response also panned allowing the state’s mapping of the damage to go until the eve of the franchise renewal, saying the extent of damage could affect the tender price. Speeding up the mapping would send a message to both the existing and potential new franchise holders that those who harm the environment have to pay to clean it up, according to the statement.
In addition, the experts called for an ICL bid for the new deal to be conditioned on the company completing its obligation by 2028 to scrape accumulated salt off the bottom of the largest evaporation pond.
Pond 5 is used for bathing by people staying at the Ein Bokek hotels. The salt has to be scraped to maintain the water level at a certain level, beyond which it will flood the hotels.
The Dead Sea is now half the size it was in 1976, due to industrial pumping, and the diversion for human use of the sweet water that used to drain into it from rivers and streams. With nothing to compensate for evaporation, the water level is dropping by 1.1 to 1.2 meters (45–48 inches) each year.
Yet the draft tender’s only binding requirements regarding the sea’s shrinking are that the concessionaire would not have to pay for any pipelines to bring additional water into the Dead Sea. It also requires that the entry of such pipelines into the sea would not harm industrial activity.
Despite the highly complex nature of any solution (geology and geopolitics presenting just two obstacles), Adam Teva V’Din nevertheless suggested creating a special fund from two sources of money that could be earmarked for solutions, should they arise. One would be that the new concessionaire would have to pay fees for pumping the saltwater out. (ICL does not pay for this at present.)
The other would be taxes and royalties paid by the new concessionaire. The organization suggested that the state put into the fund NIS 320 million (just under $88 million) per year from what it receives, based on a modest calculation that Dead Sea Works uses 200 million cubic meters of saltwater annually and multiplying this by the NIS 1.6 (44 cents) currently charged per cubic meter by one of Israel’s desalination plants.
Among other suggestions, the organization called for a legal opinion on whether the original contract’s promise to the existing franchisee of first refusal on a new concession applies to a tender.
This clause has repeatedly raised questions over the state’s ability to ensure a competitive process and attract other promising potential bidders.
