CF Fertilisers has announced it will close one of its UK fertilizer plants, in Ince, near Chester, permanently as it struggles with high energy costs.
The company, part of US-based CF Industries Holdings, said the move would “position the business for long-term profitability and sustainability”.
The closure could result in up to 283 redundancies at the site, it said.
Brett Nightingale, managing director of CF Fertilisers UK, said: “As a high-cost producer in an intensely competitive global industry, we see considerable challenges to long-term sustainability from our current operational approach.
“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.”
The Billingham manufacturing facility in Teesside is the largest ammonia, ammonium nitrate (AN) and carbon dioxide (CO2) production facility in the country. The Ince manufacturing facility has not produced ammonia since September 2021. CF Fertilisers UK added the Billingham site is more efficient than the Ince manufacturing facility, has an installed industrial customer base, and has the ability to import ammonia.
Cargill has also confirmed its intention to close its crush facility in Hull in the UK ‘due to current market conditions’. It told FoodNavigator: “This would impact 36 positions effective end of December 2022. We are working closely with impacted employees and will be providing support throughout the transition.”
Cargill’s plant in Hull, which has been operating since 1985, crushes rapeseed and specialty crops to extract crude oil and mid protein meal.
These products are developed for various applications in food (e.g. margarines), biodiesel and animal feed.
The Hull plant also has facilities to out load to barge and export oil. The Hull plant has a capacity of 750 metric tonnes of seed per day and produces around 420 metric tonnes of rape meal per day and around 323 metric tonnes rape oil per day.
The developments come amid soaring fertilizer costs in Europe, hit first by already high prices for natural gas, then by Russia’s invasion of Ukraine. Russia and Ukraine are among the world’s largest producers of wheat, fertilizer, and fuel and the invasion has stalled shipments.
Earlier this week, Barclays analysts warned that skyrocketing prices for inputs like grains and fertilisers could well continue ‘beyond 2023’.
“Bottom line, Barclays expects continued tightness in the grain and fertilizer markets lasting beyond 2023 – which suggests further pressure on input costs for packaged food players from here,” wrote Barclays equity research analyst Andrew Laza.
Chris Elliott, director of the Institute for Global Food Safety, said the news spells bad news for UK food security.
“The closure of the UK’s largest fertilizer manufacturing plant is a massive blow to the already strained agriculture and food sectors in the country,” he told FoodNavigator. Prices of fertilizer are at an all-time high due to the conflict in Ukraine and many farmers are struggling to purchase what they need to allow crops to grow, he said. “Some are now in the position they are not planting this year due to the situation. This is turn will lead to crop shortages and further price hikes in the autumn and beyond.”
A further blow to the sector, he added, is that carbon dioxide is produced as a by-product from fertilizer manufacture. “This gas is used widely in the food industry to chill products and in food packaging to preserve the food. Co2 shortages have happened over the past few years in the UK for various reasons and each time the manufacturing industry faced a crisis which were overcome by imported more gases. It is highly unlikely this time that such a solution will be found.”