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 subsectors: minerals and fertilizers; bromine, refined oils and petrochemicals; pharmaceuticals; and cosmetics. Israel’s chemical Industry employs over 30,000 people.
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 created several state-owned companies to mine raw materials and process their derivatives. In 1952, the Dead Sea Works was founded, followed in 1955 by the Dead Sea Bromine Company. Chemical production for export purposes on a large scale began in the 1960s.
Israel has been blessed with one of the world's unique natural resources- the Dead Sea. Extremely dry conditions have created an inland sea (416 meters below sea level) with resultant high evaporation characteristics creating salt and other minerals of extraordinary quality. These products have led to thriving magnesium and potash industries, and the export of black mud and Dead Sea salts for therapeutic and cosmetic purposes as well.
At present, approximately 200 quarries are in operation within the country. Overall annual production totals about 50-60 million tons of raw materials, including different kinds of aggregates, gravel, dimensional stones, sand and other materials used mainly in construction. Phosphate mines are found in the southern part of the country, and the minerals extracted are used primarily in the chemical industry and agriculture sector.
In 2012, annual turnover in the industry grew to an unprecedented high of over $120 billion owing to an increase in demand for many services and products and a concomitant rise in prices. Potash, one of the main ingredients in fertilizer which helps plants resist disease and improves crop yields, rose in price from about $150 per ton to almost $1,000 per ton from 2007 to 2008. When the financial crisis hit, however, demand dropped by almost half and prices fell nearly to their 2006 levels. The potash industry is fully consolidated, with eight companies controlling more than 80% of global supplies.
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. Commercial production is dominated by their subsidiary companies Dead Sea Works (DSW potash and salt), Dead Sea Bromine (bromine and bromine derivatives), Dead Sea Periclase (magnesia-based precuts), Dead Sea Magnesium (magnesium metal), Rotem Amfert Negev (phosphates, phosphate chemicals and fertilizers), Rami Ceramic Industries (ceramics and refractories), Negev Industrial Materials, (Fertilizers and Chemicals), and PAMA (oil shale). Dead Sea Works and Rotem are responsible for the marketing and logistics of these products.
Another strong company in this sector is ADAMA Agricultural Solutions (formerly Makhteshim Agan Industries), the world’s largest producer of generic crop protection chemicals. In January 2011, China National Chemical Corp (ChemChina) agreed to buy 60% of MA Industries in a deal that valued the company at $2.4 billion. At the time, this was the largest transaction ever concluded between a Chinese and an Israeli company.
Israel's burgeoning high-tech sector is another major customer of the chemical industry. The semiconductor industry, for example, uses many of the industries products which results in a large demand for such products. US electronics giant Motorola established a facility in Israel as early as 1964. Chip maker Intel arrived in Israel in 1975 and now has three fabrication plants in the country, while Israel's Tower Semiconductor has two.
Minerals and Fertilizers
Haifa Chemicals, with two production facilities, generates 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 compounds for plastics, electronics, furniture and textiles, as well as products based on bromine which are used for soil fumigation, water treatment and drilling equipment.
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, completed the construction of a $500 million hydrocracker to transform crude into diesel and jet fuel more efficiently in 2012.
Teva Industries is the world’s largest manufacturer of generic pharmaceuticals with a history of successfully introducing several groundbreaking drugs to the market, such as Copaxone for the treatment of MS.
Other outstanding companies, some of which are listed on international stock exchanges, include Dexxon, Taro and Perrigo, which have production facilities in Israel. Like Teva, these companies export most of the drugs they produce worldwide.