Join Our Mailing List

Sponsor Us!

Israel Science & Technology:
Resource-Based Industries


Science & Technology: Table of Contents | History & Overview | Israel & NASA


Print Friendly and PDF

Israel's reputation as a country bereft of natural resources, surrounded by a sea of oil, is not entirely true. The Dead Sea contains rich deposits of minerals and there are major reserves of phosphates in the Negev desert. Together with local technological expertise and innovative industrial processes, these resources are the basis for a large and sophisticated chemicals industry.

Since the 1980s, this industry has rapidly developed its ability to extract minerals and create high-value end-user products such as fertilizers and pesticides, petrochemicals and plastics. With a small domestic market, most of the products are sold overseas; indeed, many of the companies in the chemicals and petrochemicals sectors are large corporations with an increasingly global reach. In the past five years, some $1.3 billion has been spent acquiring foreign companies, principally in Europe and Latin America, strengthening the industry's marketing capacity.

In 1999, resource-based industrial exports reached nearly $3 billion. Sales of chemicals have tripled over the last decade, amounting to $8 billion – some 14% of the country's total industrial production.

Herzl's Vision

While the considerable income generated from Israel's minerals could not possibly have been foreseen a century ago, Theodor Herzl, the founder of modern political Zionism, did envisage a flourishing industry based on the mineral riches of the Dead Sea. This vision was primarily based on the data collected by a U.S. Navy captain, W.F. Lynch, who carried out a geological survey of the Dead Sea region in 1848. Lynch reported that the basin - which at 400 meters below sea level is the lowest point on earth - was rich in phosphates, potash and bromine.

However, the region's searing heat and isolation discouraged entrepreneurs from exploiting its resources until 1931, when Moses Novomeysky, a Russian-born industrial pioneer, persuaded the British Mandatory authorities to grant him a license to extract minerals from the Dead Sea. A year later, Novomeysky opened a factory at its northern end, and in 1934 a second plant was opened near the biblical site of Sodom. Prior to Israel's independence in 1948, the factory was mining 8,000 tons of potash and bromine per year and employed 2,000 workers. However, the endeavor failed even to cover its costs, and after Israel lost control of the northern part of the Dead Sea during the War of Independence, the southern plant became even more isolated.

In 1948, Israel's first prime minister, David Ben-Gurion, decided to nationalize the operation and to keep it running as a symbolic presence at the Dead Sea. In the early years, the Dead Sea Works failed to show a profit, but continued to operate until new technologies caused a remarkable turnaround in the company's fortunes.

Dead Sea Treasures

Dead Sea Works Ltd. (DSW) is now a major subsidiary of Israel Chemical Industries Ltd. (ICL), a highly integrated and diversified multinational corporation with sales of close to two billion dollars annually, of which 75% is exported. ICL was privatized in 1994 (the government retains a 2% interest) and is part owned by the Israel Corporation (52%), with the rest of the shares traded on the Tel Aviv Stock Exchange or owned by Canada's Potash Corporation of Saskatchewan.

Situated on the site of the original plant near Sodom, DSW has an exclusive license to mine a range of minerals from the Dead Sea, and manufactures a broad selection of products for commercial use. The change in DSW's fortunes began in the early 1980s when a new method of increasing the concentration of potash extracted from the Dead Sea was developed. Potash (potassium chloride - KCl), along with nitrogen and phosphorous, is essential for plant growth and is thus the basic ingredient in a range of fertilizers. By pouring extra brine into production basins containing the already highly salty water, the concentration of potash in the water was raised from 2% to 23%. In addition, the revolutionary cold crystallization process, developed and implemented in the 1980s, made it possible to extract potash at moderate instead of hot temperatures, thereby cutting energy costs. Further savings in DSW's energy bills was achieved by the generation of electricity from the steam given off by a by-product of the potassium. At the same time, computerization of manufacturing functions, such as a conveyor belt that shifts the potash through the mountains to a railway line, have also reduced costs. Together, these innovations have enhanced the natural advantage that DSW has over its worldwide competitors, who extract potash from under the ground. In 1998, DSW produced a record 2.8 million tons of potash, as well as an additional 800,000 tons of granulated potash, compacted for subsequent bulk blending with other fertilizers. This is achieved by a workforce of 2,200, just 10% more than it took to produce 8,000 tons 50 years ago. About 7% of the potash is exported directly; most of the remaining amount is sold to local fertilizer manufacturers, who then export their products. In 1998, DSW enjoyed profits of $50 million, of which 71% were derived from potash. DSW's investment program is geared to increase production capacity in the coming years to 3.2 million tons annually.

The Dead Sea also contains magnesium salts, which can be mined - using a unique technology introduced by immigrant scientists from Russia - and cast into metal (karnelite). This process is carried out by Dead Sea Magnesium (DSM), 65% of which is owned by DSW and 35% by the German automobile manufacturer Volkswagen. The DSM site near Sodom, established in 1996, is the largest industrial project in Israel. DSM produced about 25,000 tons of magnesium metal in 1998, the company's first full year of operations. Magnesium is half the weight of aluminum, far more durable, and capable of resisting temperatures of up to 1,800°C. Global magnesium metal consumption reached 350,000 tons in 1998, and demand for the lightweight metal by the automobile and aerospace industry is expected to increase rapidly in the first decade of the 21st century.

DSW also manufactures magnesium chloride flakes and pellets, mainly for use in de-icing, and anhydrous aluminum chloride for use as a catalyst in organic production processes. In addition, DSW produces a range of cosmetic products through its subsidiary Dead Sea Laboratories, which is marketed under the name Ahava, as well as chlorine-based products for water purification. DSW also mines 100,000 tons of table salt each year. The Dead Sea is also rich in lithium, which could have future potential use in the nuclear energy industry. DSW's total sales are about $500 million annually.

Dead Sea Periclase (DSP), an additional subsidiary of Israel Chemicals, extracts magnesium salts from the Dead Sea for the manufacture of magnesium oxide (magnesia or periclase), used by the refractory industry for manufacturing steel able to withstand the very high temperatures and harsh conditions in furnaces over long periods. The magnesia is extracted from the extremely saline water of the Dead Sea (120 times saltier than regular sea water), through a unique decomposition process developed by local scientists. By this method, DSP produces 100,000 tons of magnesia each year, resulting in company sales of $50 million, more than 80% of which is exported. The product is purer than the magnesia produced elsewhere in the world, because no external substances are used in its manufacture. Typical purity levels exceed 99.4% with very low contamination levels of boron and silica. Due to this unique chemical purity, low porosity, high mechanical strength, high density and large crystal size, DSP's magnesia outperforms ordinary products, and is applied in the most severe wear zones of furnaces, as well as in slide-gates and tap-hole blocks.

Another major mineral extracted from the Dead Sea by ICL is bromine. Through its subsidiary Dead Sea Bromine Group Ltd. (DSBG), ICL produces over 200,000 tons of bromine compounds per year. The company's production plants near the Dead Sea and in the Netherlands supply 33% of the world's consumption of bromine compounds, which are used in plastics as a flame retardant, and as organic intermediates and monomers for specialty polymers. Bromine compounds are also used as chemicals in water treatment, oil drilling, the photo industry, cosmetics, air conditioners and pesticides. DSBG, whose annual sales exceed $500 million, is aware of the environmental damage that its products can cause. The company is therefore a signatory to the Montreal Protocol of the United Nations, conducts research to prevent possible damage of the ozone layer and allocates major resources to quality control.

Phosphates, Fertilizers and Agrochemicals

Phosphate rock is mined from three sites in the Negev, south and east of Be'er Sheva, by Rotem Amfert Negev Ltd., another company in the ICL Group. The company extracts minerals and manufactures them into end products. The phosphate is mined and washed making it suitable for the manufacture of phosphoric acid, super-phosphates and complex fertilizers. Upgraded mining equipment and new technologies introduced in recent years have resulted in finer materials and increased recovery rates for the raw phosphate. When combined with potash mined from the Dead Sea and added to other chemicals (mainly nitrogen), phosphates produce high-quality fertilizers. The company manufactures P, PK, NPK and MKP fertilizers as well as NPK fully soluble fertilizers. Rotem Amfert Negev's annual sales of both raw materials and phosphate rock, as well as downstream derivatives including phosphoric acid, specialty chemicals, phosphate salts and fertilizers, amount to $720 million per year, of which 95% is exported.

Fertilizers & Chemicals Ltd., a Haifa-based subsidiary of ICL, manufactures a range of single and compounded fertilizers, both as liquids and granules, earning the company $100 million per year. It has developed over 100 products and over 800 product formulations, which provide farmers with a comprehensive package of fertilizers. These fertilizers cover the full range of nitrogen, phosphorous and potassium formulations and the company's professionals advise farmers in their correct use. Innovative fertilizers include fully soluble, low-nitrate and chlorine-free formulations for use in drip irrigation systems, and a slow-release NPK fertilizer that is released into the ground over three months.

Other major players in the field of fertilizers include Haifa Chemicals Ltd. and Makhteshim-Agan (MA) Industries Ltd. Owned by the U.S.-based Trans Resources Inc., Haifa Chemicals is the world's largest manufacturer of potassium nitrate (KNO3). KNO3 fertilizers are completely absorbed by plants, leaving no harmful residues like chloride or sodium. Haifa Chemicals also markets "fertigation" systems - irrigation networks into which fertilizers can be introduced. In addition, Haifa Chemicals manufactures technical-grade potassium nitrate for industry. These products are used in the manufacture of glass, TV tubes, ceramics, pyrotechnics and heat treatment salts, as well as sodium tripolyphosphate (STPP), used in the detergents industry. Food-grade products are used for retaining moisture in processed meat, preventing discoloration in processed potatoes and ensuring the "meltability" and "spreadibility" of cheese.

MA Industries is the world's largest manufacturers of generic pesticides and herbicides. Created by a merger of Makhteshim Chemicals Works Ltd. and Agan Chemical Manufacturers Ltd. in 1997, both owned by Koor Industries, MA Industries has combined sales of over one billion dollars, over 90% of which is exported. Its shares are traded on the Tel Aviv Stock Exchange. The company is ranked 10th globally in agro-chemical sales, and exports a broad range of insecticides, fungicides, herbicides, and plant growth regulators to over 100 countries. In recent years, MA Industries has acquired companies in Latin America and has become a leading player in the Brazilian agro-chemicals market, one of the largest in the world.

Ready-to-use formulations in various concentrations and combinations are available to suit differing geographic and climatic conditions worldwide, and technical-grade materials are supplied for formulation by overseas manufacturers. Leading insecticides include azinphos, carbaryl, chlorpyrifos, endosulfan, monocrotophos and methidathion. Fungicides include captan, folpet and captafol. MA Industries is also a global leader in the production of synthetic aroma products for the detergent and cosmetics industries, and manufactures fine chemicals, printing and photography chemicals, polyester resins, various industrial chemicals and natural antioxidants for the fast growing nutraceuticals market.

Petroleum and Plastics

Although it has established substantial overseas sales, Israel's oil refinery and petrochemicals industry is not first and foremost export-oriented. Oil Refineries Ltd. (ORL), a government-private sector joint venture, was established to supply the local energy market. ORL manufactures the full range of petroleum products used locally, including gasoline, diesel, naphtha, kerosene, residual fuel oil (for industry), lubrication oils and bitumen. These are produced at its refineries in the Haifa Bay and Ashdod, while subsidiaries produce the main raw materials for the plastics industry. As a result of the company's sophisticated and efficient processes, ORL generates more than 25% of its $2 billion in revenues from exports. ORL's refineries have an annual capacity of 13 million tons of crude oil. Emphasis is now being placed on refining more environmentally friendly products, improving the quality of gasoline and reducing the sulfur content of unleaded gasoline from 0.08% to 0.05%. ORL's main export products include vacuum gas oil, which is produced from high- quality distillates at the company's new hydrocracker unit.

ORL's subsidiary Gadiv Petrochemicals manufactures a range of petrochemical products (90% of which is exported) including aromatics and aliphatic solvents. Another ORL subsidiary, Carmel Olefins Ltd., manufactures a range of monomers and polymers for both the local and overseas plastics raw materials markets. These include ethylene, low-density polyethylene, polypropylene and expandable polystyrene (EPS). Israel Petrochemical Industries, also owned by ORL, manufactures similar products including ethylene, polyethylene, polypropylene and polystyrene. These plastics are used in the full range of contemporary applications used in daily life, from greenhouses to films, packaging to pipes, and in household utensils, toys, furniture, fibers, threads and ropes. Other major manufacturers produce organic products such as PVC, EDC and VCM and inorganic products including chlorine, caustic soda, caustic potash, hydrochloric acid, raw materials and intermediates for the detergent industry, thermosetting, melamine and urea-molding compounds, resins and adhesives, and inorganic pigments, water-based and synthetic paints, polyurethane, epoxies, varnishes, textured coatings and primers.

Gift of the Nile

No oil, but it looks like there is a lot of natural gas under Israel's Mediterranean waters. Israeli and multinational companies have been drilling and have come up with early indications of huge natural gas reserves that could power local electricity generating plants and industry. Natural gas may sound less exciting than oil, but as a fuel it is cleaner and certainly no more expensive. Conveniently, Israel discovered its first substantial reserves just as the country was gearing up for its first large-scale imports of gas.

While it is premature to say how much gas there is until more exploratory wells have been drilled, there is good reason to suspect that it is plentiful - because neighboring Egypt itself has huge reserves. The Nile River contains organic matter - the basis for gas - which is carried north through Egypt and deposited in the Mediterranean Sea in an area called the Nile Cone. The organic matter, which drifts further north to Israel's coast, is trapped by sand and pebbles, creating gas reserves there as well.


Sources: Israeli Ministry of Foreign Affairs

Back to Top