CF Fertilisers UK Limited has announced a proposal to permanently close its Billingham ammonia plant in order to “secure the long-term sustainability of its business” in the UK and more efficiently serve its customers in the country.

The company intends to continue to produce ammonium nitrate fertiliser and nitric acid at the Billingham site using imported ammonia, as it has for the last 10 months following its decision to temporarily idle its plant in August 2022.

CO2 is used across the food and drinks industry, including for stunning animals at abattoirs before slaughter and vacuum-pack packaging.

Up to 38 employees could be made redundant with the closure of the plant, but CF Fertilisers anticipates that it may be able to redeploy employees to avoid redundancies.

CF Fertilisers UK said that recent shutdowns 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. The company is of the belief that with the global availability of imported ammonia, it will operate on “a more cost-effective and efficient basis without having to produce its own ammonia.”

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.

“Fertiliser is a vital tool that helps British farmers and growers produce food for the nation. 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.”

Billingham and previous Co2 shortages

In September 2021, CO2 shortages led to the Government providing limited financial support for CF Fertiliser’ operating costs. The following month saw an agreement made by industry to ensure CF Fertilisers would be able to operate for three months. In January 2022, the Food and Drink Federation stated that it feared the end of the temporary agreement would cause more severe CO2 shortages. A new deal to help CF Fertilisers’ Billingham plant to operate while global gas prices remained high was reached in February of last year.

However, in August 2022, CF Fertilisers said natural gas and carbon prices rendered ammonia production “uneconomical” – marginal costs were above £2,000 per tonne and global ammonia prices sat at around half that level.

The company’s latest announcement confirmed that it intends to close the plant, reasoning that it will not be cost effective to continue producing ammonia at Billingham in the long-term. This is because of projected high natural gas prices in the UK relative to other regions and the impact of carbon costs.

In August 2022, British Meat Processors Association (BMPA) chief executive Nick Allen said 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.”