JERUSALEM, Nov 17 (Reuters) - Israel Chemicals (ICL) may keep its Dead Sea magnesium plant open after Israel's cabinet acted to exempt magnesium from a new, heavy tax on mining of natural resources, the company said on Monday.

"ICL's management is currently reviewing the announcement of the continued existence of the magnesium plant," ICL said in a statement.

In a final report issued last month, a government-appointed committee recommended a progressive tax of 25 percent after mining companies reach an annual return on investment of 14 percent, rising to 42 percent for a return above 20 percent.

It has since been approved by the socio-economic cabinet, which is smaller than the main cabinet but includes the finance and economy ministers, but still needs parliamentary clearance.

In August, ICL tried to raise pressure on Israeli authorities not to impose the natural resource levy by warning it would cut jobs and close the magnesium plant starting in 2017 - a facility that employs 400 people with another 150 people connected to its activities.

Israel's cabinet, however, agreed to establish a procedure to ensure that the committee's recommendations would not affect, directly or indirectly, the feasibility of operating the magnesium plant in future.

If this outcome were guaranteed, ICL management will urge its board "to consider favourably a continued operation of the business beyond 2017", the company statement said.

It cautioned, however: "Concerns remain both in the details of the regulation as well as in the long-term reliability and stability of such agreements."

In response to word of the new tax, ICL also said it would cancel planned investments worth 2.5 billion shekels ($653 million), re-evaluate another 3.5 billion shekels in investments, divert investment to other parts of the world and advance the introduction of job cuts and other cost-cutting measures at its plants in southern Israel's Negev desert.

(1 US dollar = 3.8268 Israeli shekel) (Reporting by Steven Scheer; Editing by Mark Heinrich)