Plans to shut UK ammonia plant spark new CO2 supply concerns

CF FERTILISERS UK (CF) has announced plans to halt ammonia production at its Billingham complex due to “market conditions”, renewing industry concerns about CO2 supply.

CO2 is used across the food and drinks industry, including in beer and soft drinks production, for stunning animals before slaughter in the meat sector, and for food preservation. It is a byproduct of ammonia production, a supply source for industry. Last year, the UK Government supported continued CO2 production when a spike in energy prices forced fertiliser manufacturers to shut down operations. This time, however, the Government has yet to announce any such help.

CF says that current natural gas and carbon prices make ammonia production uneconomical. It therefore plans to safely shut down production operations and rely on ammonia import to achieve ammonium nitrate (AN) fertiliser and nitric acid production at the Billingham complex. The site can import and store up to 40,000 t of ammonia, compared to a production capacity of 230,000 t/y. CF has said the Billingham site is the largest ammonia, AN (625,000 t/y), and CO2 (750 t/d) production facility in the UK. It also has an average capacity of 410,000 t/y of nitric acid.

Despite the operational change, CF expects to be able to fulfil all of its ammonia and nitric acid contracts, and all orders of AN contracted for delivery “in the coming months”. The company does not expect any impact on employees.

CF did not announce an exact date for the coming halt, however its announcement has already sparked concern in industry. This is especially as the CF Industries subsidiary decided in June to close its Ince manufacturing plant, and has since decided to proceed with decommissioning.

The British Meat Processors Association said that it expected in June that the closure of the Ince plant would leave UK CO2 supplies vulnerable to further issues at Billingham, and the country would become heavily reliant on imports to cover the shortfall. Since then, producers in Italy and Germany have cut productions, leaving European food and drinks companies struggling to secure supply of the gas.

Nick Allen, CEO of the trade body, 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 side lines and insist that it’s for companies to work it out amongst themselves. They are going to need to step in.”

Similarly, executives of brewing and pub businesses called for Government action.

Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks, consumers will now be thinking even more carefully about where they spend their money. There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers…We need an energy cap for businesses before it’s too late.”

According to press reports, a UK Government spokesperson pointed to the CO2 market’s resilience compared to last year and noted “additional imports, further production from existing domestic sources, and better stockpiles".

She added: “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.”