Teesside's CF Fertilisers praises Government after rescue deal

Business Secretray Kwasi Kwarteng has agreed to provide “limited financial support” for CF Fertilisers’ operating costs for three weeks after its closure by the American owners threatened to cripple supplies that were vital for agricullture and food safety.

Tony Will, the CEO of parent company  CF Industries Holdings, based in Deerfield, Illinois, which has eight other manufacturing centres in the United States, Canada, and the Billingham sister plant in Cheshire, said: "“We want to thank The Honorable Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, and his entire staff for working tirelessly to bring about this agreement enabling restart of the plant and averting a potential CO2 supply disruption impacting many industries, including food and beverage availability to UK consumers."

He added:  “We look forward to working with Secretary Kwarteng and the UK government on developing a longer-term solution, including the development of alternative suppliers of CO2 for the UK market.”

The company announced that it is immediately restarting the ammonia plant at its Billingham complex, which produces the vital CO2 as a by-product. The restart could take several days.

Tony Will, president and CEO at CF Industries

The Department for Business, Energy and Industrial Strategy said the “exceptional short-term arrangement” was essential to allow the company to immediately restart operations which produces around 60% of UK’s CO2, used primarily by the food sector.

Mr Kwarteng said: “This agreement will ensure the many critical industries that rely on a stable supply of CO2 have the resources they require to avoid disruption.

Read more: ‘Perfect storm’ hits UK as energy prices soar

“The quick and decisive action we have taken to resolve the issue shows the seriousness with which we have approached it.

“In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers.”

Business Secretary Kwasi Kwarteng

This morning Environment Secretary George Eustice justified the intervention at a time of major financial challenges, telling the BBC: “The reason, sometimes, it is justified for the Government to intervene in this way, in a very short-term, targeted way, is that if we didn’t, there would be a risk to our food supply chain – that’s not a risk the Government is willing to take.”

He had earlier admitted the deal could cost taxpayers “tens of millions” of pounds.

He said: “Lawyers are still working on those final details. It’s going to be into many millions, possibly the tens of millions, but it is to underpin some of those fixed costs.

“It’s going to be temporary … at the end of the day we need the market to adjust.

“The food industry know that there is going to be a sharp rise in the cost of carbon dioxide, probably going from something like £200 a tonne eventually up to closer to £1,000 a tonne, so a big, sharp rise.”

Mr Eustice said there had been a “perfect storm” caused by two plants in the UK and Norway being closed for maintenance at the same time as CF suspended operations of its two factories due to high gas costs.

Read more: Row over gas charges

He told Sky News: “The truth is if we did not act then, by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close and then we would have animal welfare issues – because you would have lots of chickens on farms that couldn’t be slaughtered on time and would have to be euthanised on farms, we would have a similar situation with pigs.

“There would have been a real animal welfare challenge here and a big disruption to the food supply chain, so we felt we needed to act.”

Stockton North MP Alex Cunningham said: “I am delighted that an agreement has been reached. 

"This is great news for our area, the hundreds of people who work there, and the many businesses and others from food processors to hospitals who rely on its products, specifically the CO2 which is produced as a by-product in the manufacture of fertiliser. 

MP Alex Cunningham

“At my meeting with the Secretary of State I re-emphasised the need to find a long-term solution to the pressure being felt by CF and other energy intensive industries on Teesside and for a new plan of action on carbon and gas transportation prices which along with rising gas prices is putting many businesses and jobs at risk.

"I hope he learns from the events of the past few days and comes forward with a sustainable long-term plan in the near future.”

Tees Valley Mayor Ben Houchen said: "This will be a huge relief for the hundreds of hard-working staff and their families who have faced uncertainty during this production pause.

"Throughout this temporary pause in production I have been in constant contact with government, officials and managers at CF, and I am pleased that a quick resolution has been reached meaning local jobs are protected.“

Ian Wright, chief executive of the Food and Drink Federation, said there could still be major problems ahead: “I think it’s a temporary solution but it’s a welcome one, and means there won’t be many noticeable shortages on the shelves, although there are already some because of staff shortages.”

He said the industry needs to “get its act together”.

Mr Wright also warned that although food would not continue to enter warehouses in the lead-up to Christmas, “the supply chain is so fragile that any other shock might do it in as well”.

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