The UK government will hold urgent talks with meat and farming groups on Thursday after CF Industries, the US fertiliser group which is the UK’s biggest carbon dioxide producer, said it would close its Billingham plant in north-east England.
CF Industries said it would temporarily halt ammonia production at Billingham as the price of natural gas, the key feedstock, has more than doubled to record levels, making it uneconomical to continue production.
CO₂, which is used by meat suppliers to stun animals before their slaughter, and the beer and soft drinks industries, is a byproduct of ammonia production.
Gas prices have continued to surge after Russia throttled supplies to Europe and the forward prices of natural gas suggest “that this price will continue to rise in the months ahead”, said CF Industries. Output from Billingham accounts for about 30 per cent of the UK’s needs, down from about 45 per cent last year, according to industry experts.
CF Industries said it would import ammonia, which is turned into fertiliser. “Once the ammonia plant is safely shut down, CO₂ production, which is a byproduct of the ammonia production process, will stop until the plant is restarted,” said CF Industries.
The Billingham news comes as CF Industries said it would mothball its Ince fertiliser facility in Cheshire in north-west England earlier this year. The company had closed both Billingham and Ince plants last year after gas prices surged around the world, only reopening Billingham after the government stepped forward with a three-week package of support.
Manufacturing facilities for various industries have been forced to close around Europe because of the soaring gas price. Ammonia producers in Italy and Germany have also cut production, which sent European food and drink companies scrambling to secure tightening supplies of the gas at the end of July.
Nick Allen, chief executive of British Meat Processors Association, said that since the closure of the Ince plant several months ago, the industry and government knew UK CO₂ supplies would become vulnerable.
“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.”
Allen said that securing CO₂ supplies was of key strategic importance. “Following this latest development, we can’t see how government can sit on the sidelines and insist that it’s for companies to work it out amongst themselves. They are going to need to step in.”
The government said it was engaging with businesses across the food and drinks industry to understand any potential impacts. A food industry executive said Thursday’s talks would focus on animal welfare.
An official at the Department for Business, Energy and Industrial Strategy said: “Since last autumn, the CO₂ market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles.
“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.”