A bid
by a group of U.K.-based investors for CF Fertilisers UK Ltd.’s Ince plant near
Chester in Northwest England is reported to have collapsed.
The UK
Nitrogen investor group, led by former British army head Lord Richard Dannatt,
has pulled its bid to secure the Ince plant (GM June 10, p. 1) after a final offer for the facility was rejected
by CF, according to the U.K.’s Telegraph newspaper.
UK
Nitrogen had hoped to take on the plant, which has been mothballed since last
September due to high natural gas costs, and which CF is proposing to
permanently close as part of a proposed restructuring of its operations in the
U.K. (GM Sept.24, 2021; Sept. 17,
2021).
The
investor group had been seeking a loan from the U.K. government of up to £10
million (approximately $11.9 million at current exchange rates) to help restart
the plant, but was turned down. The U.K. government believes this is an issue
for the market to solve, according to a report last week by the U.K.’s Financial Times, citing a government
spokesperson.
A spokesperson for CF Fertilisers’ parent company, CF Industries Holdings Inc., Deerfield, Ill., confirmed to Green Markets that regarding interest in the Ince plant, CF Industries has spoken with several parties.
In an
emailed statement, CF Industries said: “In the course of those
discussions, at no point thus far have the parameters of any transaction – proposed
or outlined – appeared likely to secure the long-term future of the Ince
manufacturing facility and its employees.”
The
spokesperson said the collective redundancy consultation process is ongoing,
and so there is no update yet as to what the redundancy numbers at Ince may be.
CF
Fertilisers said in June the closure of the Ince plant could result in up to
283 redundancies, but the company anticipated that some of the proposed
redundancies at Ince and elsewhere in the company’s U.K. operations might be
avoided by redeployment opportunities.
“None
of the proposed redundancies would take effect until at least 45 days following
the start of the consultation. But the consultation process continues, so I
have no specific date to share for their implementation,” he told Green Markets.
The CF Ince plant has the capacity to produce ammonia, nitric acid, ammonium nitrate, and NPKs, and also CO2 as a byproduct of the ammonia production process.
If the Ince plant is permanently closed, the U.K. will be left with only one AN manufacturing facility, the CF plant at Billingham, in Teeside, Northeast England. CF believes that only one manufacturing facility is needed to fulfill U.K. AN demand.
Billingham
has 0.58 million mt/y of AN production capacity, while CF’s Ince plant has 0.5
million mt/y of AN production capacity, according to Green Markets‘ Nitrogen Quarterly Model.
The
U.K. currently imports some 300,000 mt of AN annually, comprising low-cost AN
that comes primarily from Lithuania and Poland and displaces U.K. production,
according to Green Markets Director
of Research Alexis Maxwell.
“The U.K.
also exports some 150,000 mt to 200,000 mt of AN annually to nearby European
destinations,” Maxwell said.
As
carbon costs continue to increase substantially in the U.K., CF Fertilisers
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
company also expects global nitrogen industry conditions to remain challenging
for nitrogen producers in the U.K. and Europe.
CF’s
Billingham plant – as well as the Ince plant, when it was operating – supply CO2
to the U.K. industrial gas sector, and between them have combined capability to
produce an estimated 60% of the country’s CO2. The gas is vital for many of the
U.K’s food processing and drink sectors, as well as for the country’s hospitals
and nuclear power sectors, among other sectors.
Supporters
of the now-failed UK Nitrogen bid had argued that as well as reducing
fertilizer supplies to U.K. farmers, the closure of the Ince plant poses a risk
to future supplies of CO2 in the country.
The
company’s Billingham complex alone is able to supply a substantial volume of CO2
to industrial gas customers, being capable of producing 750 mt of CO2 per day
for commercial use. But, as noted by CF Fertilisers last month, CF’s supply of
CO2 “has become less important to its future” as U.K. industrial gas
customers diversify their CO2 supply away from CF Fertilisers.
