Food sector alarm as gas prices shut vital CO₂ supplier

Irish food processors and abattoirs are scrambling for supplies of carbon dioxide as a key supplier closed its doors, blaming high gas prices.

Britain’s CF Industries announced the closure of its last remaining fertiliser plant in the UK late on Wednesday, saying the spike in natural gas prices had made the energy-intensive process uneconomical. Ammonia is a key ingredient in fertiliser and it produces carbon dioxide (CO₂) as a byproduct.

The British government on Thursday ruled out further state financial support to keep the factory open.

Many Irish processors secure their carbon dioxide from the UK. Ireland no longer produces fertiliser locally so all CO₂ from that source would be imported. The plant in Billingham, on Teesside, accounts for nearly a third of the UK’s supplies of the gas, which is essential to industries ranging from beer to meat to fizzy drinks and is also used in hospitals and as a coolant in nuclear power plants.

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Meat processors, brewers, bakers, farmers and soft drink producers all use CO₂ in producing their goods and packaging them in an inert gas to keep them fresh.

It is also required for the stunning before slaughter of animals, including pigs and chickens.

“At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level,” the company said.

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Food processors have already been dealing with dramatically increased prices as gas prices pushed up the cost of making ammonia in the last year.

Paul Kelly, director of Ibec’s Food Drink Ireland group, said there were concerns emerging in the supply chain for food grade CO₂ following the CF Industries announcement. He said similar supply shortage situations had deteriorated quickly in 2018 and 2021.

“The food and drink processing sector, which is already facing a very difficult environment with high input cost inflation and other supply-chain shortages, will continue to monitor this carefully in the coming days and weeks,” said Mr Kelly.

Mr Kelly has said previously that Irish companies would typically have between one and four weeks’ supply, depending on the nature of their business.

The CF decision comes against a broader trend of ammonia producers across Europe cutting production. Norway’s Yara, one of the world’s largest fertiliser producers, also announced this week that it is cutting ammonia production because of rising gas prices. That follows similar moves by the likes of Germany’s BASF and other companies across Europe in countries like Italy, Poland and Hungary.