INEOS halts three UK chemical plants over high energy costs

Photo: Global banking and finance

INEOS, the industrials group founded by billionaire Jim Ratcliffe, is idling all three of its chemical plants in Hull in the north of England after energy prices surged, Bloomberg reports.

The plants are Europe’s last remaining world-scale acetyls units, producing the raw material used in industries and products including pharmaceuticals, clothing and construction, the company said in a statement Tuesday. Ineos employs 245 workers at the site, with around 4,000 jobs in the supply chain affected, it said.

“With gas prices now 12 times the level in the US and eight times that of China, we just cannot compete,” Ratcliffe said. “European regulators need to wake up to the fact that the combination of high energy costs and the additional burden of unsustainable carbon taxes are destroying our European manufacturing base.”

The decision to mothball the sites until further notice comes as chemical producers in Europe face a structural crisis, with demand muted, global overcapacity depressing prices and power costs making production expensive. Several producers have filed for insolvency, announced closures or shifted investments abroad.

The European Union’s Critical Chemicals Alliance is assessing which assets could qualify for state support after around 9% of European production capacity was earmarked to close between 2022 and 2025.

The decision is a blow for the Humber region around Hull, which has suffered a string of closures in recent years. Once a thriving industrial hub, sites in the area have struggled to compete and have shut down, including a bioethanol plant on the same Saltend chemicals park as Ineos.

“While this is a commercial decision from INEOS, we know this will be a concerning time for workers in Saltend and their families,” a government spokesperson said in a statement. They cited measures it’s taking to ease the pressure, such as £350 million ($468 million) in support for the sector.

The problems aren’t just in Britain. Chemical companies across Europe are grappling with high costs.

Leuna Polyamid GmbH is closing its plant in East Germany next month after an overhaul and state aid failed to save the facility. Meanwhile, LyondellBasell Industries NV offloaded three of its European assets earlier this year to private equity firm Aequita. Other companies, such as BASF SE, are cutting jobs.

As well as chemicals, INEOS is known for its stake in Manchester United Football Club.

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