UK ministers reject request for aid to reopen fertilizer plant

The UK government has rejected a request for a loan of up to £10million from a consortium seeking to reopen one of Britain’s last fertilizer factories.

UK Nitrogen, a group of investors backed by Lord Richard Dannatt – a former head of the British army – is in talks with CF Industries, a leading US crop nutrient manufacturer, to buy its Ince plant in Cheshire, mothballed since last September.

Several fertilizer plants were shut down last fall as gas prices rose around the world, making production unprofitable.

It has caused disruption in the soft drink industry and with meat suppliers who use carbon dioxide – a by-product of fertilizer production – to stun animals before they are slaughtered.

CF Industries reopened its factory in Billingham, Teesside, only after the government offered a three-week support package. The company announced last month that it would close the Ince plant in August, cutting around 350 jobs.

UK Nitrogen has insisted it is not “asking for taxpayers’ money at all” to buy the Ince plant, but is simply looking for help to restart it.

But the Financial Times established that the group had applied for a loan of between £5m and £10m from the government to pursue the deal.

In a meeting with UK Nitrogen on June 27, Lee Rowley, a junior business minister, rejected the consortium’s loan request, according to a government insider. “The government thinks this is a problem the market needs to solve,” a government spokesman said.

Proponents of the deal argue that a permanent closure of Ince would reduce the UK’s fertilizer supply for farmers, weakening the country’s food industry and posing a risk to future CO₂ suppliers.

“The [Ukraine] the war has highlighted the importance of fertilizers,” said one. “The Russian sanctions will have an impact on the availability of fertilizers. Supplies will be quite unreliable as winter approaches.

UK Nitrogen said if the government continues to refuse to provide a loan it may still be able to raise additional equity, but any deal is expected to be signed soon.

“Timing is crucial as the layoff declaration at Ince obviously led to a potential loss of staff by mid-August,” the consortium said. “We will review our options over the next two weeks. After that, it will be very difficult.

UK Nitrogen is made up of fertilizer companies, private equity groups and high net worth individuals. The consortium said a temporary loan to cover start-up costs would ultimately cost taxpayers nothing as it would be repaid.

While the Department for Environment, Food and Rural Affairs was broadly supportive, the decision rests with the Department for Business, Energy and Industrial Strategy, which strongly rejected the loan offer.

CF Industries said:[We have] spoke with several parties. During these discussions, at no time to date have the parameters of a transaction – proposed or described – appeared likely to secure the long-term future of Ince’s manufacturing facility and its employees.

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