CF Fertilisers to close Billingham ammonia plant

CF Fertilisers to close Billingham ammonia plant

A proposal to permanently close its Billingham ammonia plant has been released by CF Fertilisers UK Limited, claiming to “secure the long-term sustainability of its business” in the UK and serve its customers in the country more efficiently.

CO2 is used to slaughter livestock and vacuum-pack meat products.

For the last 10 months, following its decision to temporarily idle its plant in August 2022, the company has been using imported ammonia to produce ammonium nitrate fertiliser and nitric acid at the Billingham site – CF Fertilisers has confirmed that it will continue production in this way.

Within the meat industry, CO2 is used for the humane slaughter of livestock, the preservation of perishable meats and vacuum-packing products ready for sale.

The company’s proposal to permanently close the ammonia plant at its Billingham Complex could result in up to 38 redundancies at the site, but it anticipates that some of the proposed redundancies might be avoided by redeployment opportunities.

Recent closures of industrial customers’ UK operations that had consumed ammonia volumes for their businesses have created a supply-demand imbalance for ammonia production at the Billingham Complex, said CF Fertilisers UK. The company believes that global availability of imported ammonia will allow it to operate on “a more cost-effective and efficient basis without having to produce its own ammonia.”

Responding to the Billingham Complex closure announcement, NFU deputy president Tom Bradshaw said: “This decision is a concerning one and exposes our fertiliser market further to global volatility. Availability of fertiliser is a crucial element of domestic food security and relying on importing ammonia from global markets exposes British fertiliser production to possible long-term risks.

“It’s important that the Government now look closely at how this shift to a reliance of imported ammonia could impact our domestic food production and highlights the need to maintain access to all nitrogen fertiliser products including urea.”

A history of CO2 shortages

CO2 shortages allowed the Government to provide limited financial support for CF Fertilisers’ operating costs in September 2021, and in the following month an agreement was made by industry to ensure the company would be able to operate for a further three months.

The Food and Drink Federation stated in January 2022 that it feared the end of the temporary agreement would cause more CO2 shortages, and the following month saw Government reach a new deal to help CF Fertilisers’ Billingham plant to operate while gas prices remained high.

The company said in August 2022 that natural gas and carbon prices rendered ammonia production “uneconomical”, and that marginal costs exceeded £2,000 per tonne while global ammonia prices were about half that level.

British Meat Processors Association (BMPA) CEO Nick Allen said in August 2022 that if the Billingham plant were to close, the British meat industry would have “serious concerns.”

He said: “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.”

This latest announcement from CF Fertilisers confirmed that the plant will close, reasoning that it will not be cost effective to continue producing ammonia at Billingham long-term because of projected high natural gas prices in the UK compared to other regions and the impact of carbon costs.

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