Finance

Deal struck with CF Fertilisers to restart CO2 production, reports claim

The Government is reported to have struck a deal with fertiliser firm CF Industries to restart production at its UK sites in an effort to ensure availability of carbon dioxide for industries including the food sector.

News of the deal followed talks between the company – which has sites in the North East and the North West – and Business Secretary Kwasi Kwarteng.

Production at CF Fertilsers’ two plants – in Billingham and Cheshire – was suspended last week, with the company blaming rising gas prices for making its operations unviable.

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That has led to knock-on problems in the food industry, for which CF is the main UK supplier of carbon dioxide. Warnings of looming shortages in supermarkets led to Mr Kwarteng having talks with CF in recent days and offering support “on a temporary basis”.

It has not yet been revealed when CO2 production will resume, nor what the deal will cost to restart.

Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit by shortages because CF has stopped production of CO2.

CF produces about 60% of the UK’s food-grade CO2 as a by-product of its fertiliser production. It is used when slaughtering pigs and chickens to stun them.

The chief executive of the Food and Drink Federation, Ian Wright, says the potential shortages of CO2 supply is “a real crisis” and said “the just-in-time system which underpins both supermarkets and hospitality industry is under the most strain it has ever been in the 40 years it has been there”.

Mr Kwarteng is grappling with a spike in global gas prices which has left energy companies struggling, as well as having the knock-on effect on food supply.

He said the combination of rising gas prices and the looming £20 a week cut to Universal Credit was a “difficult situation” and he had spoken to Cabinet colleagues including Chancellor Rishi Sunak about the pressures facing households.

During a trip to the US to meet President Biden for the first time, Prime Minister Boris Johnson said: “Obviously, we’re working with the companies to make sure that we can keep the supplies going. On the carbon dioxide issue that’s particularly important for some industries, we’re taking direct steps to make sure that that continues to be available.”

When asked whether that meant subsidies, he said: “We’ll do what’s necessary and you’ll be hearing a bit more about that later on in the day.”

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