Israel Chemicals (ICL) Files $198 million Lawsuit Against Ethiopian Gov’t

Israel Chemicals (ICL) files a $198 million compensation lawsuit
Fertilizer heavyweight Israel Chemicals (ICL) files a $198 million compensation lawsuit against the Ethiopian government for losses it incurred due to the latter’s ‘failure to provide the necessary infrastructures and regulatory framework’.

BY THE REPORTER

The Israeli fertilizer giant, Israel Chemicals (ICL), which was involved in potash mine development project in Ethiopia, filed a lawsuit against the Ethiopian government at The Hague International Arbitration Court.

The fertilizer producer, ICL, abandoned the potash mine development project in the Afar Regional State in the Dallol Depression and pulled out of Ethiopia due to a controversial tax claim in October 2016.

Reliable sources said ICL accused the Ethiopia of impairing its investment project and demanded USD 198 million in compensation payment.



In a statement sent to The Reporter, ICL said it has filed an Investment Treaty Claim against the Ethiopian government in relation to State “violations” of the Agreement on Encouragement and Reciprocal Protection of Investments between Ethiopia and the Netherlands.

>> ALSO READ : Israel Chemicals Quits Potash Project in Ethiopia

ICL Europe, subsidiary company based in the Netherlands, filed the law suit. “The violations relate to, inter alia, the state’s imposition of an illegal tax assessment against, and its failure to provide infrastructure support to Allana Potash Afar Plc., an indirect subsidiary of ICL Europe,” ICL said.

ICL Europe filed the claim under the Arbitration Rules of the United Nations Commission on International Trade Law and requested that the Permanent Court of Arbitration at The Hague administer the arbitration proceedings. The company said it has booked a full tax provision in respect of the tax claim.

After buying Allana Potash in May 2015, ICL was working on a potash mine development project in the Afar Regional State in the Dallol depression through its subsidiary company Allana Potash Afar. ICL was trying to transfer the large scale mining license of Allan when the Ethiopian Revenue and Customs Authority (ERCA) claimed 50 million in tax payment from Allana Potash Afar, a subsidiary of ICL.

Last April, the Ethiopian government took over the potash mine concession where ICL was working on.

The Minister of Mines, Petroleum and Natural Gas, Motuma Mekassa, confirmed to The Reporter that ICL filed a lawsuit at the International Arbitration Court.



Motuma said the case is being over seen at the International Court. “We shall decide what we are going to do with the potash mine once the court litigation is completed.”

Allana Potash, a Canadian company listed in the Toronto Stock Exchange, was the rightful owner of the Dallol potash concession. In 2013, the then Ministry of Mines granted Allana a large scale mining license that enables it to develop the vast potash deposit estimated at 3.2 billion tons. Due to the commodity market crash occurred in 2013, Allana was unable to raise the required investment capital-700 million dollars-to develop the mine.

Consequently, Allana was sold out to ICL for 150 million dollars and de-listed from the stock exchange. The deal includes the acquisition of Allana Potash Afar, a subsidiary of Allana Potash, and the rightful owner of the potash concession in Ethiopia. ICL through the subsidiary company was planning to develop the potash mine and build three fertilizer blending plants at a cost of more than one billion dollars.

ICL applied to the then Ministry of Mines to transfer the mining license and the ministry was processing the request when ERCA claimed 50 million dollars tax payment from Allana Potash Afar. When ICL bought Allana Potash it assumed 10 million dollars VAT and Withholding tax arrears. ERCA also requested some 40 million dollars capital gain tax for the property acquisition. Allana Afar Potash refused to pay the tax claiming that it was made based on an “illegal tax assessment” and terminated the potash mine development project. According to ICL, the net value of the investment in the project as of June 30, 2016 was approximately USD 170 million.



Officials of the Ministry of Mines, Petroleum and Natural Gas told The Reporter that ICL rushed to the international court while it was possible to amicably settle the issue through negotiations. “They could have appealed to the tax authority. We were also ready to negotiate but unfortunately they opted to take the case to court,” the officials said.The officials told The Reporter that the Ethiopian government was committed to develop all the required infrastructure in the remote concession area known for its harsh climate.

ICL is the 6th largest potash fertilizer producer in the world and the 2nd in west Europe. ICL is a publicly traded company listed in the New York Stock Exchange (NYSE) with a capital of 12 billion dollars.

Headquartered in Tel Aviv, the company earns an annual turnover of over six billion dollars. The company was established by the State of Israel in 1968 and was privatized in the 1990s.


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  • the regime is already broke … it can’t pay its crushing debt

    Ethiopia fails to pay creditors

    A 1.8 billion dollars is due this year to creditors but an empty coffer is worrying authorities in Addis Ababa who took 40 billion dollars in loans from various creditors.

    According to ESAT sources, it would be impossible to pay the amount due this year when the the country was able to generate only 2.9 billion dollars in export trade this year.

    Revenue from export trade fell short of its goal with only 2.9 billion dollars of the targeted 4.75 billion dollars earned this year.

    Of the total 40 billion in loans, the federal government owes 30 billion while 10 billion of the loan was taken on behalf of the Ethiopian Airlines, Ethiopian Telecom, Roads Authority, Ethiopian Electric and the Ethiopian Railway. All but the Ethiopian Airlines and Ethiopian Telecom have failed to pay back their debt. Let alone paying their debt, according to the sources, the institutions are hardly able to pay salaries to their employees.

    The sources said the regime has now resorted to buy petroleum on credit from Sudan. As a kickback to Sudan, the agreement stipulates for Ethiopia to agree to import through the port of Sudan and also for Ethiopia to transfer the administration of disputed lands on border areas to the Sudan for ten years, as recently reported by ESAT.

    Sources also disclosed that the National Bank and the Ministry of Finance and Economic Development, the two institution that encouraged and played a key role in taking the loans, are now at war with each other, one blaming the other for the failure to pay back the loans.

    While the country is underwater financially, members of the oligarchy, who are overlooking mega projects, were still benefiting and pocketing money meant to pay for projects. Two names mentioned by ESAT sources are Arkebe Oqubay, who is in charge of building industrial parks and Sufian Ahmed, the minister of finance.

    • Alem Mehari

      It was evident long time ago the clique has empty coffers and indebted up to its head. The litmus test is how do the masters of the junta react to save the ailing child, debt cancellation or rescheduling the debt ….. Where are the weyane spine doctors the Sentikos the Atakiltis the Abels and et al. We are expecting bizarre explanation to this occurrence it is not uncommon they will go wild and try to lecture us how the junta has indefinite amount of dollars how great Ethiopia is how it has a constitution how it is governed blah blah and of course all the ghost investments.

  • cane libero

    Heji metsiu neger, entay dea yequn? Bàal double digit entay yegebru yeqonu? For me seems that might the time the minority criminal junta in power is in a sel financial coup d’etat imposed by herself.

  • One Observer

    Please ALERT the Italian authorities. This known human trafficker/smuggler just told us that she is smuggling 2000 people from Libya to Italy.

    https://twitter.com/meronina/status/907976671969660928

    • Alem Mehari

      She has been in the business for too long one day she might be accountable for her undertaking. It is disturbing to learn of all the people in the world she and the other notorious ” priest” know who and how many often Eritreans are embarking to the risky and onerous journey to Europe.

    • Nitricc

      WoW; this is point blank human trafficking at work. hmmmmmmmm?

    • Kaleab B

      Some one pointed this out today as well. I hope Polizia di Stato have this one on their list too.

      https://twitter.com/allpolitiko/status/908050698700574720

  • Laleylaley

    Nothing will come out of this. Holland has interest in ethiopia. It has companies there. Israelis still trusts the weyanes for some stupid reason. For simple geo political reasons, this will disappear. Weyanes will simply promise something to the Great Powers (they bribed sudan with land).. And the thing will go away. Thats the weyane nature.. Remember when Djibouti finally wanted to get paid directly instead of by credit?? They called their masters.. And the thing gets solved ..