The UK’s last fertiliser plant says all jobs at its Billingham site are safe after it was forced to stop production of ammonia - a key element in the manufacture of vital CO2 supplies for many industries.
CF Fertilisers blamed energy prices, saying: "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 current cost of natural gas is more than twice as high as it was one year ago."
Read more: CF Fertilisers to halt ammonia production at Billingham factory
But the company said it would instead be importing its ammonia, meaning the plant would still have enough work for its entire workforce.
"CF Fertilisers UK intends to use the site’s capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants.
"The Company has not yet determined the exact date when it will begin the temporary shutdown of the ammonia plant. At this time, CF Fertilisers UK do not anticipate any impact on employees regarding this announcement given the substantial level of activity that will continue to occur at Billingham."
But the impact in the huge CO2 market could be disastrous, as CO2 is used in a raft of sectors but particularly in food and drink, including in the slaughter of pigs and chickens, to add fizz to beer and soft drinks, and in packaging foods safely.
CF Fertilisers produces around 42% of UK’s CO2 with the rest met by other producers ranging from biofuel plants, anaerobic digestion plants and European imports.
Brewers and meat producers have warned the proposed shutdown will threaten the operations of suppliers, and Stockton North MP Alex Cunningham said Ministers had 'stuck their heads in the sand.'
He said: “Today’s announcement from CF Fertilisers is extremely concerning and the Government’s immediate priority should be to find a way to get CF Fertilisers producing in a way that is economical, and ensuring the availability of CO2 for the food and drink industry.
“I am fearful that this announcement could mark the end for UK-based fertiliser production as a result of high gas prices, but also gas transportation charges and carbon costs.
"I have lost count of the number of times I've warned the government that these issues were crippling firms like CF but ministers have ignored what was coming down the line, stuck their heads deep in the sand, and prevaricated and passed the buck instead of taking action to address the needs of this industry.
“CF’s announcement is a result of the Government’s failure to act when they had numerous opportunities. It is imperative that they do so now.”
Tees Valley Mayor Ben Houchen said: "While this move is obviously concerning, I want to assure local people that CF Fertilisers is not closing its plant and no jobs will be lost as it pauses production of ammonia.
“This situation clearly shows how it’s not just hard-working households that are struggling with energy bills, more needs to be done to halt rising prices across the board. This will also help businesses like CF combat spiralling costs for the good of its workers, clients and industries that rely on CO2 as a by-product of its work.
“When CF Fertilisers temporarily paused ammonia production in 2021, I called on Government to step in, which it did. I’ll once again do all I can to seek a solution to help restart production and secure the livelihoods of its staff.”
A Government spokeswoman said: “We are aware that CF Fertilisers has taken the decision to temporarily halt ammonia production at Billingham.
“Since last autumn, the CO2 market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles.
“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.”
Read more: CF Fertilisers to halt production at Billingham factory
The CF spokesperson said: The Company has notified customers who purchase carbon dioxide on a contract basis from the Billingham Complex about the impending temporary halt of ammonia production. Once the ammonia plant is safely shut down, CO2 production, which is a byproduct of the ammonia production process, will stop until the plant is restarted."
The shock decision comes comes almost two years after CF first stopped production at its factory, sparking anger among suppliers and an urgent supply agreement co-ordinated with Government to ensure production continued.
Then the Government agreed to provide “limited financial support” to cover operating costs for three weeks while the carbon dioxide market adapted to global gas prices.
The Department for Business, Energy and Industrial Strategy said the “exceptional short-term arrangement”, brokered by Business Secretary Kwasi Kwarteng with the US-owned firm would allow the company to immediately restart operations at Billingham.
Today Nick Allen, chief executive of the British Meat Processors Association, said the Government must step in again.
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.”
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.
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