– Holds government accountable for loss of properties
ICL, the Israeli company which recently announced its decision to terminate its investment in the potash mine development project in the Afar Regional State, requested the Ministry of Mines, Petroleum and Natural Gas to take over the potash project.
In a letter dated November 8, 2016 and addressed to the Ministry of Mines, Petroleum and Natural Gas, ICL expressed its intention to handover the potash mine concession to the ministry. The company has outlined its detail restoration plan and demanded to be given a certificate of proper mining closure.
“Following the notice of termination of the mining agreement license submitted by Allana Potash Afar (APA) Plc, a unit of ICL, to the ministry dated October 24, 2016, ICL hereby submits a restoration plan for approval for proper closure of the project and handover of the concession sites to the government according to the country’s mining operation proclamation,” the letter reads.
ICL stated that the “illegal blocking of APA accounts” by the Ethiopian Revenue and Customs Authority (ERCA) forced it to evacuate its employees and cease all of its activity at the concession sites. It said APA was compelled to shut down the camp and cease its operations causing the company a tremendous loss of economic value after having spent tens of millions of dollars to drill and maintain the wells. “The loss is not only in terms of the immediate shut down of the operation but also in terms of what production and design information we could have gained if not forced to immediately abandon these operations,” ICL said.
The company said during the period in which Allan Afar Potash accounts were illegally blocked first on instruction of ERCA and then by the Afar Regional State, the company was denied the ability to secure and maintain its facilities and equipment at the concession sites which were exposed to theft and vandalism.
“We are already aware of several cases of breaking into containers and damages caused to equipment and installations during the time of blocking of the accounts. We are still reviewing the extent of the damage caused to the facilities and equipment during this period.”
ICL said it was unable to pay its employees and contractors during the time the accounts were blocked by ERCA and the Afar Regional State and that this may expose it to breach of contract claims by third parties. “We hold the government accountable for all loses, damages and liabilities caused to APA as a result of the illegal blocking of its accounts,” the company warned.
ERCA briefly blocked APA’s bank accounts following the announcement of the termination of its investment in Ethiopia.
On Thursday, ICL decided to lay off 145 employees working in its Ethiopian office without paying them compensations.
On October 6, the board of ICL announced its decision to terminate the potash development project in Dallol depression project due to a controversial tax bill amounting to 55 million dollars. On October 10, ERCA blocked all the bank accounts of ICL after the company declined to pay capital gains tax, withholding tax and VAT. The authority also froze the assets of ICL.
ICL ventured into the potash development project after it acquired Allana Potash, the Canadian company that owned the potash mine concession, in 2015. ERCA requested ICL to pay capital gain tax for the acquisition and also withholding tax and VAT which Allana had not settled. ICL assumed all the assets and liabilities of ICL in Ethiopia.
ICL agreed to pay the withholding and VAT that Allana owes the government but refused to pay the capital gain tax as the transaction took place at the Toronto Stock Exchange. The withholding tax and VAT payable to ERCA is estimated at 15 million dollars. ICL is yet to settle these taxes.