Relief as fertiliser and CO2 production set to continue at Billingham

Fertiliser manufacturer CF Industries has confirmed that it is to continue producing ammonium nitrate and its crucial carbon dioxide by-product at its Billingham complex on Teesside until the end of the year.

Last month, the company’s UK subsidiary, CF Fertilisers, suspended production at both of its UK facilities – Billingham, Teesside, and Ince, Cheshire – in response to rocketing natural gas prices, which meant it was no longer profitable to operate.

But the sites also produce an estimated 60% of the UK’s carbon dioxide, used in all manner of processes from stunning animals in slaughterhouses and extending the shelf-life of food, to carbonating drinks and cooling nuclear reactors.

See also: AN shutdowns bring fears for fertiliser supply and prices

The sudden shortage created chaos in the food supply chain, exacerbating the build up of livestock on farms and shortages of some products in supermarkets.

Temporary relief was afforded by the government in the form of a multi-million-pound taxpayer subsidy to underwrite the cost of production at the Billingham site, but only for a three-week period.

That period was due to expire on Tuesday (12 October), prompting fears of a return to the chaos of three weeks ago.

Deal brokered

But the company and government have issued separate statements today (Monday 11 October), explaining that a deal has been brokered which will see users of carbon dioxide paying higher prices to keep production viable.

“This will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer,” said a government statement.

Business secretary Kwasi Kwarteng said the agreement meant critical industries could have confidence in their supplies of carbon dioxide over the coming months, without further taxpayer support.

“The government acted quickly to provide CF Fertilisers with the support it needed to kick-start production, and give us enough breathing space to agree a longer-term, more sustainable solution,” he said.

Competition law

Last week, the government temporarily exempted parts of the industry from competition law, to allow businesses to co-operate and so provide further security of carbon dioxide supplies.

“We are pleased to have reached a commercial solution that enables the Billingham complex to continue to operate through January, alleviating near-term carbon dioxide supply concerns in the UK,” said Tony Will, president and chief executive of CF Industries.

He thanked Mr Kwarteng and the company’s industrial gas customers “for the speed and spirit of co-operation that have marked our discussions over the past three weeks.”

“We look forward to working with them in the future, as they develop a longer-term solution to carbon dioxide supply and to support sustainable and competitive UK ammonia and fertiliser production,” he added.

Over the next three months, the government and industrial gas customers are expected to develop “robust alternative sources of carbon dioxide”, as part of a long-term solution for meeting demand.

Supply increasing

The Billingham complex is able to produce 750t of carbon dioxide a day for commercial use.

In addition, major commercial carbon dioxide producer Ensus reopened its Wilton plant last week, following temporary closure for planned maintenance, further securing supplies.

“The Wilton plant can produce up to 40% of the UK’s carbon dioxide requirements,” said a government statement.

But CF Fertilisers’ other main fertiliser and carbon dioxide facility at Ince, Cheshire, will remain out of production.

The company does not have an estimate for when production will resume at the facility.