The government has urged Britain’s biggest supplier of carbon dioxide to find a buyer for a plant in Cheshire where hundreds of jobs are at risk.
Lee Rowley, the industry minister, held discussions with CF Fertilisers yesterday after the American-owned company announced that it planned to permanently close one of its two plants in Britain as it struggles to cope with rising gas costs.
CF Fertilisers makes CO2 as a by-product that is used in fizzy drinks and to keep food fresh. It said it plans to permanently shut its factory in Ince, Cheshire, and put about 350 jobs at risk. The company received millions of pounds of government support last September after it paused UK production amid soaring gas prices that made production unprofitable. The support was used by CF Fertilisers to restart production at its other UK factory in Billingham, Teesside, to address a CO2 shortage it said could have severely impacted the food processing sector, the NHS and nuclear power generation.
CF Fertilisers never restarted operations in Ince and has now decided to close the factory as part of a restructuring, citing intense competition from lower-cost imports.
Brett Nightingale, managing director, CF Fertilisers UK, said that as a “high-cost producer in an intensely competitive global industry, we see considerable challenges to long-term sustainability from our current operational approach”.
He added: “Following a strategic review of our business, we believe that the best way to continue our legacy of serving customers in the UK is to operate only the Billingham manufacturing facility moving forward, while addressing cost pressures throughout our business.”
Food manufacturers are concerned about the impact of a permanent closure of the site on Britain’s future supplies. “We’re assured by CF Industries that there will be no disruption to Co2 supplies to the meat industry,” the British Meat Processors Association said. “However the closure of one of only a handful of facilities in the UK means that future supplies will become somewhat less secure.”
CF Fertilisers said that sales volumes to UK customers have fallen by nearly 30 per cent since the 2017-18 season as food and drink companies look to cheaper overseas suppliers. CF Fertilisers said it expects that its production will be placed at an “even larger competitive disadvantage” against imports without a carbon border adjustment mechanism to ensure a level playing field.
The government is preparing to consult on such a mechanism later this year. It is also understood to have helped protect CF Fertilisers from some £114 million of green levies last year by awarding it free allowances under the UK emissions trading scheme, which caps the amount of greenhouse gases that energy-intensive industries can use.
CF Fertilisers has calculated that its Billingham factory has the capacity to produce enough ammonia, which is used to create CO2, to meet all forecast domestic consumer demand and create a foundation for profitable operations.
A government spokeswoman said: “We understand this will be distressing news for CF Fertilisers workers and their families. We are in regular contact with the company and stand ready to support those impacted.” She said that the closure of the plant “is a commercial decision for CF Fertilisers and it will not impact supplies of CO2.
“The government gave only limited financial support to the company, for three weeks last year, to immediately restart their Billingham plant on Teesside.”
The company said it has notified employees of the restructuring proposals and will be holding meetings over the next two days. Some of the jobs at risk are corporate roles, which could be permanently moved to the US. The proposed job losses also include up to 33 from the planned closure of an operations centre in Billingham.
Mick Chalmers, the regional co-ordinating officer for Unite, the union representing employees, said the proposed closure of the Ince factory was “a devastating blow for our members and the Cheshire economy”. He added: “We will be demanding that all other alternatives are seriously considered to keep the factory open and retain jobs.”
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UK’s biggest carbon dioxide supplier to close Cheshire plant