CF Fertilisers UK has announced that it will temporarily halt ammonia production at its Billingham Complex due to “uneconomical” market conditions.
The move has consequences for the UK food industry which uses the CO2 by-product of ammonia production as part of meat processing and drinks production.
In a statement, CF Fertilisers UK said that, at current natural gas and carbon prices, its ammonia production is “uneconomical”, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level. The current cost of natural gas at NBP is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead.
The Company has notified customers who purchase carbon dioxide (CO2) on a contract basis from the Billingham Complex about the impending temporary halt of ammonia production. Once the ammonia plant is safely shut down, CO2 production, which is a by-product of the ammonia production process, will stop until the plant is restarted.
The Company has not yet determined the exact date when it will begin the temporary shutdown of the ammonia plant. At this time, CF Fertilisers UK said it does not anticipate any impact on employees regarding this announcement given the substantial level of activity that will continue to occur at Billingham.
CF Fertilisers UK said that it intends to use the site’s capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants. The Company expects to fulfil all ammonia and nitric acid contracts and all orders of AN contracted for delivery in the coming months.
Potential animal welfare issues
Chief executive of the British Meat Processors Association (BMPA) Nick Allen said that, whilst the industry is in “a much better position” than a year ago, if the Billingham plant closes the British meat industry will have “serious concerns.”
He explained: “We knew back in June that the closure of CF Industries’ Cheshire plant would leave UK CO2 supplies vulnerable to anything going wrong with their remaining Billingham plant and that we would be heavily reliant on overseas suppliers to make up the shortfall. Since then, ammonia producers in Italy and Germany have cut production which sent European food and drink companies scrambling to secure tightening supplies of the gas at the end of July.
“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.”
He added: “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.”
