Home Commodities UK’s biggest fertiliser producer CF Industries to shut plant as energy costs bite

UK’s biggest fertiliser producer CF Industries to shut plant as energy costs bite

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Britain’s biggest fertiliser producer and carbon dioxide supplier to the country’s meat, beer and soft drinks sectors is to close one of its plants as soaring energy costs continue to bite.

US fertiliser group CF Industries said it would permanently shut its Ince plant in Cheshire and restructure its UK operations, leading to the loss of about 350 jobs.

The company is an important part of the UK food supply chain, supplying fertiliser for farmers as well as CO₂, which is used in the meat industry for slaughtering livestock, food and drink production and packaging.

Tony Will, CF’s chief executive, said while the company had explored all possible alternatives including changing business models and seeking a buyer for the plant, the best way of “making sure we could maintain operations and provide critical products to the local market” was to close the facility. The move would make CF’s Billingham plant in Teesside “viable for the long term”, he added.

The Ince plant had been closed since September when soaring gas prices in Europe made the production of fertiliser uneconomical and CF shut down the facility, along with the Billingham plant. However, the closure also removed a large portion of the UK’s CO₂ supply, which is a byproduct of the fertiliser manufacturing process, prompting warnings of chaos.

CF restarted its Billingham operations in October after it came to an agreement with the UK government, and later signed a supply deal with industrial gas companies BOC, Nippon Gases and Air Liquide.

CF’s move comes as profitability for nitrogen fertiliser producers in the UK and Europe remains under pressure due to the elevated cost of natural gas, the key raw ingredient. “Gas prices will come down but they won’t come down sharply,” said Shruti Kashyap, analyst at consultants CRU. On the other hand, the price of nitrogen fertilisers was expected to ease with new projects coming on line in Nigeria, Egypt and India, she added.

The expected prices of natural gas in the future suggest that nitrogen fertiliser facilities in the UK and Europe will be “the world’s high-cost marginal producers for the foreseeable future, presenting a constant challenge to the sustainability of current operations”, said CF.

CF said Billingham had the capacity to produce enough fertiliser and other products to meet all forecast domestic customer demand. The facility could also supply a substantial volume of CO₂ to industrial gas customers, although they were diversifying their needs away from CF, said the company.

The Unite union said the proposed closure was “a devastating blow for our members and the Cheshire economy”. Regional coordinating officer Mick Chalmers said the union “will be demanding that all other alternatives are seriously considered to keep the factory open and retain jobs”.

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