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UK chemicals industry ‘heading for extinction’ warns Jim Ratcliffe

by January 13, 2025
January 13, 2025
UK chemicals industry ‘heading for extinction’ warns Jim Ratcliffe

Britain’s chemicals industry faces an “extinction event” amid soaring energy prices and rising carbon taxes, Sir Jim Ratcliffe has warned, after announcing the closure of Ineos’s last remaining synthetic ethanol plant in the UK.

The shutdown of the Grangemouth facility, which mainly supplied the healthcare and pharmaceutical sectors, took effect on Wednesday, resulting in a net loss of 80 jobs and threatening over 500 more in the broader supply chain. It also means Britain will now rely entirely on imports for synthetic ethanol, a key ingredient used in everything from medicines and paints to disinfectants and hand sanitiser.

Ratcliffe, 72, accused government energy policy of “de-industrialising” the country and shifting emissions-heavy production overseas. “The UK, and particularly the north, needs high quality manufacturing,” he said. “We are witnessing the extinction of one of our major industries as chemical manufacture has the life squeezed out of it.”

According to Ineos, ten large chemical complexes have closed across the UK in the past five years, including sites in Billingham and Lynemouth. No new plant has been built for a generation, leaving domestic production capacities dwindling. Industry body the Chemical Industries Association said that Britain’s chemical output has dropped nearly 40 per cent since 2021.

Steve Elliott, the association’s chief executive, urged government support to tackle uncompetitive energy prices and carbon costs. “The UK needs to decide if it wants to break or make a key manufacturer,” he said.

The closure of the synthetic ethanol plant is not the only looming blow for the Grangemouth complex. Scotland’s last oil refinery, a joint venture between Ineos and PetroChina, is set to be converted into a fuel-import terminal this spring, resulting in a net loss of around 400 jobs. Unite, the union, called the move “industrial vandalism”.

Ratcliffe, who founded Ineos in 1998, pinned the blame on “huge disadvantage” in UK energy pricing, pointing out that natural gas costs have escalated from 50p to around 120p per therm.

He urged Westminster to produce a coherent energy policy that can supply globally competitive prices for gas and hydrogen, enact trade measures that support UK manufacturing rather than incentivising imports, and reform emissions trading so it stops acting as a “stealth tax” on domestic producers.

A government spokesman called Ineos’s closure announcement “very disappointing” and criticised the lack of a credible industrial strategy for Scotland. Westminster insists it is now developing a new blueprint to support growth across the entire UK, emphasising that strategic, long-term measures must be accompanied by immediate reforms to keep heavy industry viable.

Ineos employees affected by the synthetic ethanol closure are being redeployed elsewhere on site, where the company continues to produce ethylene and propylene. Synthetic ethanol customers, meanwhile, will have to look overseas for supply, including from Ineos’s other facility in Herne, Germany.

Industry leaders fear the continued erosion of the UK’s chemicals sector will have knock-on consequences for the wider economy, which relies on domestic output for pharmaceuticals, cosmetics, construction materials and more. Without urgent government intervention, they say Britain risks losing its footing in a critical global market, potentially dragging down employment and investment for decades to come.

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UK chemicals industry ‘heading for extinction’ warns Jim Ratcliffe

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