The UK’s last fertiliser plant is to halt production, sparking fears that it could lead to a sudden shortfall in carbon dioxide needed for the food and drink industry.
CF Fertilisers, which has its headquarters in Cheshire, confirmed the move at its remaining UK ammonia plant at Billingham near Middlesbrough after soaring energy costs made production “uneconomical”.
CF Fertilisers first reported issues almost two years ago.
The Billingham fertiliser plant is now the UK's last after CF announced in June that it was to permanently shut its plant in Ince, Cheshire, with the potential loss of 283 jobs.
The closure was part of 'proposals to restructure its operations' after the Ince facility stopped producing ammonia in September 2021 amid soaring energy prices.
And it comes almost two years after CF first stopped production at its factory, sparking anger among suppliers and an urgent 'rescue deal' supply agreement co-ordinated with Government to ensure production continued.
What's caused it?
The company is one of the UK’s biggest producers of CO2, which is a by-product from the production of ammonia.
The news is a high-profile example of the soaring costs that businesses are facing. It said in a statement that it has decided to pause production amid concerns its costs will continue to surge in the coming months.
“At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level,” the company added.
What is the wider impact?
Halting CO2 production could have a huge knock-on effect for the drinks trade that rely on it for fizzy drinks and meat producers who use it in abattoirs and for meat packaging.
There are fears it could lead to animal welfare issues if there is a backlog due to lack of supply.
Emma McClarkin, chief executive of the British Beer and Pub Association, said the timing of the announcement “couldn’t be worse” as she also called for the Government to intervene.
“This decision raises serious concerns for the sustainable supply of CO2 to the brewing and pub industry,” she said.
“A guaranteed supply is essential for operations across pub and brewing businesses and this announcement comes at a time when they are already facing extreme cost rising that are threatening businesses and people’s livelihoods across the country.”
Will the Government step in?
The Government has said it is “aware” of this latest decision and is examining options to improve the resilience of CO2 production in the UK.
Nick Allen, chief executive of the British Meat Processors Association, said the Government will “need to step in”.
He said: “Whilst we are in a much better position now than we were a year ago, if CF Industries follows through on its threat to close Billingham the British meat industry will have serious concerns.
“Without sufficient CO2 supplies the UK will potentially face an animal welfare issue with a mounting number of pigs and poultry unable to be sent for processing.
“It’s for this reason that securing CO2 supplies is of key strategic importance and, following this latest development, we can’t see how Government can sit on the sidelines and insist that it’s for companies to work it out amongst themselves.”
A Government spokeswoman said that the CO2 market’s resilience has improved since last Autumn. She said that there were additional imports, further production from existing domestic sources and better stockpiles.
She said: “While the Government continues to examine options for the market to improve resilience over the longer term, it is essential industry acts in the interests of the public and business to do everything it can to meet demand.”
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