Israel Chemicals Ltd. (ICL), a fertilizer producer facing increased taxes at home, plans to invest as much as $500 million in a joint venture to mine phosphate in China.
The venture with China’s Yunnan Yuntianhua Co. (600096) will include a mine that produces about 2.5 million metric tons of phosphate rock. As part of the deal, Israel Chemicals will acquire a 15 percent stake in its Chinese partner for about $269 million, the Tel Aviv-based company said today in a statement.
Israel Chemicals, which harvests minerals from the Dead Sea, has canceled $750 million of investments at home and put a further $1 billion of spending on hold amid a row with the government over higher taxation of natural-resources companies. It has also struggled to obtain permission to operate a phosphate mine in southern Israel because of environmental concerns.
“Seems like very good news for” Israel Chemicals, Gilad Alper, a senior analyst at Excellence Nessuah Brokerage in Petach Tikva, said today by phone. “They are diversifying away from Israel and building a big business in a growth market.”
Israel Chemicals declined 0.9 percent to 27.86 shekels at 4:35 p.m. in Tel Aviv.
The deal is expected to close in the first quarter of 2016, subject to conditions including government approvals, Israel Chemicals said.
Yuntianhua is controlled by Yuntianhua Group Co.