CF Industries halts ammonia production at UK plant due to rising gas prices

Fertilizer maker CF Industries Holdings Inc. is set to halt ammonia production at its remaining UK plant in response to rising natural gas prices, which could reduce carbon supplies crucial to the food industry and increase price pressures.

F’s Billingham facility in north east England is the UK’s main source of CO2, used to stun pigs and chickens for slaughter, in packaging to extend shelf life and in dry ice to keep items frozen during delivery. Natural gas is the main feedstock for most nitrogen fertilizers, including ammonia, while CO2 is a by-product of ammonia emissions.

The temporary closure announced on Wednesday will bring back memories of a year ago when CF previously halted production in the UK, wreaking havoc across the food supply chain. Users have been encouraged to look for new sources of supply, although it’s not clear how much progress has been made. A repeat of this crisis could further exacerbate UK food inflation, which is already rising at its fastest rate in a decade.

The British government gave early warning of the risk of the energy crisis for British industry, but still faces a crisis of company closures and reduced production. According to government briefings, chemical and fertilizer factories were particularly at risk. Local natural gas futures are five times higher than a year ago.

CF originally closed both of them last September. Within days, an online grocer stopped delivering frozen produce to customers due to dry ice shortages, and the meat industry warned business was about to grind to a halt. Temporary government aid and a deal negotiated with industry to avoid shortages had helped the Billingham plant reopen.

CF has since closed the smaller of its two UK fertilizer plants permanently. Together they accounted for up to 60% of the country’s CO2 production. According to the CRU Group, the Billingham plant has a capacity of 400,000 tons per year.

UK CO2 users have already relied heavily on imports to make up the deficit since CF’s first plant closed, and European food and drink companies have also scramble to secure supplies as ammonia producers elsewhere in the region die Production cut due to rising gas prices, said Britain’s Meat Processing Association chief executive officer Nick Allen.

“Although we are in a much better position now than we were a year ago, the UK meat industry will have serious concerns if CF Industries carries out its threat to close Billingham,” he said. “Without an adequate supply of CO2, the UK may face an animal welfare issue as growing numbers of pigs and poultry cannot be sent for processing.”

Read more: Closure of a C02 plant makes the UK food industry a little less safe

CF said it has notified customers who buy carbon on a contract basis from Billingham of the planned temporary halt. The company cited current natural gas prices, which are skyrocketing due to supply disruptions following the Russian invasion of Ukraine, and the price of carbon for the closure.

“Once the ammonia plant is safely shut down, CO2 production, which is a by-product of the ammonia production process, will be halted until the plant is restarted,” the company said.

Bloomberg CF Industries halts ammonia production at UK plant due to rising gas prices

Fry Electronics Team

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