* Net profit $305 mln vs $286 mln forecast
* Revenue $1.64 bln vs $1.61 bln forecast
* Potash sales up 42 pct to 1.31 mln tonnes
* Exploring phosphate mining sites outside of Israel
By Tova Cohen
TEL AVIV, May 13 Israel Chemicals (ICL)'s
forecast-beating first-quarter profits were overshadowed by
worries about potash prices on Monday, and a government proposal
to examine state royalties on natural resources also distracted
from the firm's healthy order books.
ICL's sales of potash, a nutrient which improves crop
yields, rose 42 percent from the year-ago period to 1.31 million
tonnes and the company said increasing volumes in both potash
and phosphate fertiliser compensated for lower prices.
Net profit in the quarter rose six percent to $305 million
from $289 million a year earlier and revenue grew nine percent
to $1.64 billion. ICL had been forecast to earn $286 million on
revenue of $1.61 billion, according to a Reuters poll.
ICL said it signed deals to supply 660,000 tonnes of potash
to China in the first half of the year and 920,000 tonnes of
potash to India - 100,000 more than initially agreed - including
options for 50,000 tonnes, from April 2013 to January 2014.
The company also said Brazil was showing strong demand for
fertilisers this year.
However, prices for contracts signed with China were down
$70 per tonne compared with last year, not just for ICL but for
all the major potash producers. Contracts with India were $63
per tonne lower than previous agreements from 2011.
Demand for potash, which improves yields of corn, rice, palm
oil and other crops, has boomed in the past decade as a growing
global population and better incomes and higher living standards
in developing countries fuel global food demand.
ICL shares were flat at 41.18 shekels in midday trade. The
stock has lost nearly 10 percent since April 25 when Canada's
Potash Corp , one of the world's largest potash
producers, said it was abandoning efforts to take over ICL
because of strong opposition in Israel, but analysts said other
concerns were now taking precedence.
"At this price level it goes beyond the Potash deal. It has
to do with regulatory uncertainty and some easing in commodities
pricing," said UBS analyst Roni Biron.
The regulatory uncertainty is the result of comments made
last month by Finance Minister Yair Lapid that he would set up a
public committee to re-examine the state's rights to natural
resources managed by private companies.
"Some people are saying maybe he (Lapid) will go ahead with
another increase in royalties on potash. As long as it's out
there people are saying they are going to wait till it's
clarified," Biron said.
Separately, ICL urged the government to approve its plan to
mine phosphates at a new site in the Negev desert, saying its
reserves would be significantly reduced in the long term if the
plan failed. That could lead to a phasing-out of its phosphate
operations in Israel, it said.
"The company has begun investigating alternative phosphate
mining sites outside of Israel," ICL said.
The Barir field is near the town of Arad, whose residents
oppose new mining activities, fearing health repercussions.
ICL set a dividend of $213 million or 16.7 cents a share, up
from 11.6 cents in the fourth quarter.