* Q2 net profit $75 million vs $86 million forecast
* Q2 revenue down 22 percent to $1.2 billion
* Strike cost ICL $112 million in profit, $253 million in sales
* Shares up 1 percent in early New York trading (Adds CEO comments, share reaction)
By Steven Scheer
JERUSALEM, Aug 12 (Reuters) - Israel Chemicals (ICL) expects to bounce back in the second half of the year after reporting a smaller than expected rise in quarterly profit as a result of a strike over job cuts that sent revenue down 22 percent.
The company was also hopeful that a government plan to levy taxes on mining activities would be scrapped or watered down.
ICL, which has exclusive permits to extract minerals from the Dead Sea, said on Wednesday it earned $75 million in the second quarter, compared with $68 million a year earlier. Revenue dipped to $1.20 billion from $1.54 billion.
The company, one of the three largest suppliers of the crop nutrient potash to China, India and Europe, was expected to make a net profit of $86 million on revenue of $1.26 billion, according to a Reuters poll of analysts.
A strike protesting planned layoffs between February and May at ICL's bromine and potash plants at the Dead Sea wiped off $253 million in sales and $112 million from net profit in the second quarter, ICL said, adding that the impact was less than it had anticipated.
After the strike ended and paved the way for more than 100 employees to take early retirement, potash production was expanded and has now reached pre-strike levels. ICL expects sales to return to normal in the third quarter.
"The ramp-up after the strike both in potash and in bromine and bromine compounds is going better than expected," Chief Executive Stefan Borgas told a conference call of analysts, saying there have so far been no equipment breakdowns that could have occurred after a long outage.
Its Dead Sea plants are producing at record levels and by the fourth quarter should be producing at a rate of 4 million tonnes a year, Borgas said, adding that it has increased potash output at its UK plant.
In June, ICL signed a deal to supply 835,000 tonnes of potash to its customers in India at a selling price of $10 per tonne above previous contracts.
ICL, controlled by conglomerate Israel Corp, declared a dividend for the second quarter of $52.5 million.
It is currently locked in a battle with the Israeli government over a plan to tax mining companies aimed at boosting state coffers by 500 million shekels ($131 million) a year. In protest, ICL has frozen or put under review nearly $2 billion in domestic projects, while expanding activities outside Israel.
While there have been no decisions yet, "the entire discussion atmosphere is becoming quite positive," Borgas said.
ICL's New York-listed shares were 1 percent higher at $6.54 in early trade but they are 10 percent lower so far in 2015. ($1 = 3.8141 shekels) (Reporting by Steven Scheer, editing by Louise Heavens and David Evans)