27 September 2013 10:12 [Source: ICB]
Switzerland-headquartered INEOS confirmed it will close its Grangemouth petrochemical plant in the UK by 2017 unless it can stop the facility from losing money and obtain the necessary investment to secure shale gas feedstock supply.
Calum MacLean, INEOS chairman of Olefins and Polymers Europe, said the company has been facing losses of £150m/year ($240m, €179m/year) due to a decline in North Sea petrochemical feedstocks and because the pension scheme is £200m in deficit, while pension costs are an unsustainable 65% of salary.
INEOS' Grangemouth site faces closure by 2017
In the interview, he added that, to source shale gas from the US and get the cracker operating at 100%, INEOS would need a £150m investment to prepare the site and a further £200m to offset losses while a required new tanker facility was being built.
If the site continues to lose over £100m/year, Maclean admitted the petrochemical side of the business will not continue beyond 2017. However, if this investment was obtained, the future of the plant would be secured for the next 20 years, although this would need to be combined with a change in structure of the group’s current pension scheme.
INEOS is already facing the threat of industrial action. On 13 September, Unite, the UK’s largest union, sent out ballots to workers at Petroineos’ 210,000 bbl/day Grangemouth refinery to vote on possible strikes.
Petroineos comprises trading and refining joint ventures between INEOS and China’s state-owned PetroChina. In July 2011, PetroChina completed a $1bn purchase of a 50% stake in INEOS’ European refining operations.
Unite decided to ballot over INEOS’ decision to investigate allegations a senior site union representative inappropriately used company resources and systems.
A dispute also continues between workers and management over issues surrounding pension provisions, and claims that agency workers have been misused.
The ballots will be returned and counted after two weeks. In response, INEOS said it was disappointed with Unite’s decision to ballot its members at Grangemouth, adding it would not be intimidated by the union’s actions.
“INEOS has a fair and reasonable process for investigating this type of allegation. The company believes that this process should be allowed to proceed unhindered by interference from a trade union,” the company said.
At the time, INEOS added that although it had invested over £1bn, the business continues to struggle and, with heavy cash losses, industrial action was neither wise nor sensible.
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