Ineos, the UK chemicals group, is considering shutting its plant in Grangemouth in Scotland because of rising costs and the decline in production of gas from the North Sea.
In a rare interview, chairman Jim Ratcliffe told the Financial Times that Grangemouth was “at a crossroads”.
“To have a future it needs cheap feedstocks . . . and a sensible cost structure,” he said. “If we can’t resolve those issues, it would need to shut down.”
One of Britain’s biggest private companies, Ineos grew by acquiring the unwanted subsidiaries of global oil and chemical groups such as BP, ICI and BASF and is now one of the world’s largest chemical groups, with sales of $43bn in 2011 and 51 manufacturing facilities in 11 countries. Mr Ratcliffe is its chairman and biggest shareholder.
Ineos has a chemicals plant in Grangemouth, near Edinburgh, but Mr Ratcliffe said it had “not been a successful asset” and had lost “a significant amount of money” in recent years. He said that was largely because of the fall in output of North Sea gas and the plant’s “expensive” cost base and big pension obligations.
Pat Rafferty, Scottish secretary for the union Unite, said he was “disappointed” by what he called a “blatant attempt by Jim Ratcliffe to position the workforce ahead of scheduled talks on pensions and future site investments”.
“Our position on [Grangemouth] is that we should talk face to face on these matters rather than conduct our industrial business in the media,” he said.
The future of Grangemouth could hinge on Ineos’s efforts to harness the shale gas revolution in the US. The huge surge in gas production there has brought down costs for energy consumers and spurred a manufacturing renaissance in the US.
Ineos has signed contracts to ship large quantities of ethane derived from cheap US shale gas to its chemicals plant in Rafnes, Norway. It has invested more than €100m in a new import terminal there, with the first ethane tanker expected to dock there in 2015.
Mr Ratcliffe said Ineos was also considering building a similar facility at Grangemouth and was talking with the government about obtaining a loan guarantee for the project. But he said any decision was contingent on the outcome of talks with the unions on reducing costs at the plant.
One of the biggest problems, he said, was energy costs, which he said had been driven up by high environmental taxes on consumers. “It’s fine being very, very green, but it’s not if you’re interested in manufacturing,” he said. “Anybody who’s an energy user is just going to disappear.”