UK ministers rebuff request for help in reopening fertiliser plant

The UK government has rebuffed a request for a loan of up to £10mn from a consortium seeking to reopen one of Britain’s last fertiliser plants.

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

Several fertiliser factories were shut down last autumn as gas prices surged around the world, rendering production uneconomical.

That prompted disruption in the soft drinks industry and among meat suppliers that use carbon dioxide — a byproduct of the production of fertiliser — to stun animals before their slaughter.

CF Industries reopened its factory in Billingham, Teesside, only after the government stepped forward with a three-week package of support. The company announced last month that it would shut down the Ince plant in August, leading to about 350 job losses.

UK Nitrogen has insisted that it is “not asking for any taxpayer money at all” to buy the Ince plant, but rather just seeking help to restart it.

But the Financial Times has established that the group has sought a loan of between £5mn and £10mn from the government to go ahead with the deal.

In a meeting with UK Nitrogen on June 27, Lee Rowley, a junior business minister, rebuffed the consortium’s request for a loan, according to one government insider. “The government believes this is an issue for the market to solve,” said a government spokesperson.

Supporters of the deal argue that a permanent shutdown of Ince would reduce UK fertiliser supplies for farmers, weakening the country’s food industry as well as posing a risk to future suppliers of CO₂.

“The [Ukraine] war has highlighted the importance of fertilisers,” said one. “The Russian sanctions will impact on availability of fertilisers. Supplies will be quite unreliable going into the winter.”

UK Nitrogen said that if the government continued to refuse to give a loan, it still might be able to raise additional equity but that any deal would need to be signed soon.

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

UK Nitrogen is made up of fertiliser 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 because it would be repaid.

While the Department for Environment, Food and Rural Affairs has been broadly sympathetic, the decision rests with the Department for Business, Energy and Industrial Strategy, which has firmly rejected the bid for a loan.

CF Industries said: “[We have] spoken with several parties. In the course of those discussions, at no point thus far have the parameters of any transaction — proposed or outlined — appeared likely to secure the long-term future of the Ince manufacturing facility and its employees.”