|
Getting your Trinity Audio player ready...
|
In a significant move aimed at reshaping the future of mineral extraction from the Dead Sea, the Israeli government published a series of proposals on Monday that seek to ensure greater public benefit from one of the nation’s most valuable natural resources.
The current franchise for Dead Sea mineral extraction, held by the ICL Group, is set to expire in 2030, prompting the ministries of finance and environmental protection, alongside the Tax Authority, to release a raft of proposals for the next franchise agreement.
Key recommendations include increasing the share of profits allocated to the public, reducing the amount of land granted for extraction, charging for the use of water, and imposing stricter planning and building regulations.
While these measures seek to address some of the longstanding concerns regarding public benefit and environmental sustainability, they offer little hope for slowing the ongoing decline of the Dead Sea’s water levels.
The Legacy of the Dead Sea Works
The Dead Sea Works, which began as a private potash factory in 1930, was nationalized in 1951 and granted exclusive rights to extract minerals from the Dead Sea by the Knesset in 1961.
This lease, which extends for 69 years, is currently held by the ICL Group, a subsidiary of Israel Corporation, the country’s largest holding company owned by the Ofer family.
Under this agreement, ICL has developed the infrastructure to extract potash, a potassium-rich mineral essential for fertilizers, from the Dead Sea, playing a crucial role in the company’s profitability.
Over the years, the Dead Sea Works has become a linchpin for ICL’s financial success. According to a media briefing on Monday, 53 to 64 percent of ICL’s operating profits between 2017 and 2023 came from the Dead Sea Works.
During this period, the company reported average annual operating profits ranging from $690 million to $830 million, much of which is derived from potash extraction.
Despite the company’s impressive financial returns, the environmental impact of these operations has raised concerns.
The Dead Sea’s water level continues to plummet by approximately 1.1 to 1.2 meters (45 to 48 inches) each year, leaving the lake — once a single body of water — split into two sections, with the southern part dominated by artificial evaporation pools used by the Dead Sea Works.
Proposals for Public Benefit
The government’s newly released proposals aim to address some of the imbalances in the current arrangement. At the heart of the recommendations is a call for the public to receive a larger share of the profits generated by the extraction operations.
This proposal reflects growing sentiment among Israeli citizens and policymakers that the state should benefit more directly from the natural resources extracted from the Dead Sea.
In addition to boosting public benefit, the proposals also recommend reducing the amount of land allocated for mineral extraction and charging the company for its use of water from the Dead Sea — a resource that is currently used at no cost.
This measure would not only ensure more equitable resource distribution but also provide an economic incentive to conserve water usage in the region.
Another important element of the proposals involves the imposition of stricter planning and building regulations on the franchise holder.
The aim is to limit the environmental damage caused by the industrial infrastructure surrounding the Dead Sea, which has long been a point of contention for environmental activists and local communities alike.
Environmental Challenges and the Dead Sea’s Decline
While the government’s proposals mark a step toward addressing some of the issues surrounding the Dead Sea’s mineral extraction, they offer little in terms of halting the lake’s ongoing decline.
Since 1976, the Dead Sea has shrunk to half its original size, largely due to water diversion from its main tributary, the Jordan River, as well as the extraction activities at the southern end of the lake.
Environmental experts warn that without a comprehensive plan to address the root causes of the Dead Sea’s shrinking, these new proposals may only serve as a temporary solution.
The water level’s annual drop of over a meter has caused a range of ecological and infrastructural problems, including the emergence of massive sinkholes along the shoreline, which have rendered some areas unsafe for tourism and development.
While the government acknowledges the environmental importance of the Dead Sea, the current proposals appear to focus more on optimizing the financial and regulatory framework surrounding mineral extraction rather than tackling the broader ecological crisis.
ICL’s Position and Industry Advantages
ICL Group, which currently holds the franchise, has expressed a strong interest in securing the new tender.
According to a 2019 report prepared by a governmental body led by then-Chief Economist of the Finance Ministry, Yoel Naveh, ICL possesses several significant advantages over potential competitors.
The company’s deep industrial knowledge of the mineral extraction process and its extensive infrastructure at the Dead Sea give it a clear edge.
Moreover, ICL’s ownership of businesses that can convert raw materials from the Dead Sea into end products adds another layer of efficiency and profitability, further solidifying its competitive position.
These advantages could discourage other companies from bidding for the new franchise, raising concerns about the level of competition in the tender process.
To mitigate this risk, the Naveh report recommended setting a minimum price for the tender to ensure that the public receives fair value for the franchise. It remains unclear whether this recommendation will be implemented.
Balancing Economic and Environmental Interests
In a joint statement released on Monday, the ministries of finance and environmental protection, along with the Tax Authority, emphasized the need for a balanced approach to mineral extraction at the Dead Sea.
“In light of the importance of the area from an economic, tourist, and historical point of view, the report places great emphasis on creating a balance between the continued production of essential minerals, which are an important pillar of Israel’s economy, and the need to preserve the special environment of the Dead Sea,” the statement read.
The government’s goal is to develop a regulatory model that ensures both the sustainable use of the Dead Sea’s resources and the protection of the environment for future generations.
However, the challenge lies in balancing these competing interests — the economic benefits derived from mineral extraction and the need to address the environmental degradation that threatens the future of the Dead Sea.
Looking Ahead: The Future of Dead Sea Extraction
As the current franchise draws to a close in 2030, the Israeli government faces a complex task in determining the future of Dead Sea mineral extraction.
The newly proposed regulations signal a shift toward greater public benefit and tighter environmental oversight, but questions remain about how effective these measures will be in addressing the long-term sustainability of the Dead Sea.
An ICL spokesperson welcomed the government’s efforts to define future franchise conditions, noting that the company remains committed to working transparently and cooperatively with state authorities.
“We received the report and welcome the attempt to define the future conditions and reduce uncertainty regarding the future franchise conditions for the sake of all stakeholders. We will study the report and address its details with transparency and cooperation with the state authorities, as always,” the spokesperson said.
As the tender process unfolds in the coming years, stakeholders will be watching closely to see how the government balances economic, environmental, and public interests in one of the country’s most iconic and fragile natural landscapes.
Conclusion
The future of mineral extraction from the Dead Sea remains uncertain as the Israeli government prepares to re-tender the franchise in 2030.
With new proposals focused on increasing public benefit, conserving water, and imposing stricter regulations, the stage is set for a more equitable and sustainable approach.
However, the ongoing environmental crisis facing the Dead Sea underscores the need for a comprehensive strategy that goes beyond financial considerations.