Israel's Chemical Industry

Israel’s chemical industry has played a major role in the country’s economic development and has in some areas established Israel among the world's leading chemical-producing nations. The industry can be divided into several areas: (1) minerals and fertilizers; (2) bromine, refined oils and petrochemicals; (3) pharmaceuticals; (4) cosmetics. Though Israel is generally characterized as a country with few natural resources, the Dead Sea region provides a rich source of minerals, including potash for the fertilizer industry, bromine and related compounds, and magnesium. The water and mud of the region is used in cosmetics and has renowned healing properties.

Highlights

 In 2008 annual turnover in the industry was boosted to an unprecedented high of $25 billion owing to an increase in demand for many services and products and a tremendous rise in prices. Potash, one of the main ingredients in fertilizer that helps plants resist disease and so improves crop yields, rose in price from about $150 a ton to almost $1,000 between 2007 and 2008. When the financial crisis hit, however, demand dropped by almost half and prices fell nearly to their 2006 levels. Industry executives expect potash demand to soar again in 2011, causing prices to continue higher. The potash industry is fully consolidated, with eight companies controlling more than 80% of global supplies, and Israel Chemicals is one of them. Israel’s chemical industry in 2009 made up 26% of total industrial output.

• A major factor in the expansion of the chemical industry can be credited to Israel Chemicals Industries (ICL) and its subsidiaries, with its innovative accomplishments in fertilizers, chemicals, and by-products based on raw materials, such as phosphate, potash magnesium and bromine. Another strong company is Makhteshim Agan Industries, the world’s biggest maker of generic crop protection chemicals. In January 2011, China National Chemical Corp agreed to buy 60% of MA Industries in a deal that values the company at $2.4 billion.

• The first industrial facilities for the production of pharmaceuticals were established in the 1930’s. Several small pharmaceutical companies combined to form Teva Pharmaceuticals in 1952, today the world's biggest generic drugmaker.

• The chemical industry actively supports environmental legislation efforts, stimulated by domestic and foreign initiative alike. Community Advisory Panels (CAP) were formed between the major chemical producers that have an impact on the environment. The Negev desert region, which houses the majority of the chemical industry in Israel, has nine CAP in different stages of activity. By the time Israel joined the Organization for Economic Cooperation and Development (OECD) as a full member, most of Israel's factories already complied with environmental benchmarks established by the industry, which are in line with OECD standards.

• Israel’s chemical Industry employs over 30,000 workers.

Background

•  Israel’s chemical industry began formally at the beginning of the last century, when efforts were made to extract potash and later bromine from the Dead Sea. 

• By 1946, the manufacture of potash fertilizers had begun in Haifa and with the establishment of the State, the new government sponsored several state-owned companies to mine raw materials and process their derivatives. In 1952, the Dead Sea Works was founded, followed by the Dead Sea Bromine Company in 1955. Chemical production for export purposes on large scale began in the 1960’s.

Minerals and Fertilizers

• Dead Sea Works produces around 3.5 tons of potash annually in Israel, together with ICL worldwide facilities, producing almost 10% of the world’s requirements.

• Israel is one of the world leaders in the production of white phosphoric acid.

•  Haifa Chemicals, with two production facilities, makes 30% of the world's "green" fertilizer, potassium nitrate, sold to more than 100 countries and is one of the largest producers in the world. 

• The Timna valley near Eilat, home to Timna Mines, served as Israel's primary copper mining area from 1958 to 1985. In recent years, there have been renewed efforts to continue copper mining at this historical mining site that is also known as King Solomon's Mines with a goal of producing over 20,000 tons of pure copper annually.

Bromine, Refined Oils and Petrochemicals

• Bromine, produced in the Dead Sea area, is the cheapest source of bromine available worldwide. There are also plants for the production of bromine compound for plastics, electronics, furniture and textiles, as well as products based on bromine which is used for soil fumigation, water treatment and drilling equipment.

• ICL’s bromine production plant at the Dead Sea in Sodom has a production capacity of about 250,000 metric tons of bromine a year and is the largest single bromine production facility in the world.

• There are currently two oil refineries in Israel producing refined products for local and foreign consumption. Petrochemical production, based on these refineries, produce raw materials for export and the local plastics industry. Oil Refineries (Bazan), the larger of the two refineries located in Haifa, is building a $500 million hydrocracker to more efficiently transform crude into diesel and jet fuel once it becomes operational in the first half of 2012.  

• Other petrochemical facilities produce aromatic products and intermediates for the chemical industry.

Pharmaceuticals

• Teva Industries is the largest generic pharmaceutical company in the world with a history of successfully introducing several groundbreaking drugs to the market, such as Copaxone for the treatment of MS. From 1999 to 2009, Teva’s revenue grew to about $14 billion from $1.3 billion. Teva produces about 60 billion tablets a year in 38 different locations in the world.

• Other outstanding companies, some of which are listed on international stock exchanges, include Dexxon, Taro and Perrigo, which has production facilities in Israel. Like Teva, these companies export most of the drugs they produce worldwide.

• In the area of biotechnology, Israel has a bounty of small companies working on products in different development stages. Many have already reached the production stage.

Cosmetic Industry

• There are more than 100 cosmetic manufacturers certified by the Ministry of Health in Israel, about half of which use Dead Sea minerals.

• Exports of Israeli cosmetic products reached $417 million in 2009.