Ineos Closes Factory, Hundreds Unemployed, Chemical Industry's Doom Approaches

On January 13, Ineos officially announced that due to a lack of effective energy strategy and heavy carbon tax burdens, the UK chemical industry is on the brink of termination. This announcement marks the closure of Ineos's last synthetic ethanol factory in the UK, resulting in the unemployment of hundreds of employees.

The ethanol plant in Grangemouth, Scotland, one of only two remaining ethanol production facilities in Europe, has produced the equivalent of 25 billion bottles of Scotch whisky since it began operations over 40 years ago. Synthetic ethanol is a key raw material for the production of many pharmaceuticals and is essential for numerous best-selling drugs. Ineos synthesizes ethanol by adding water (steam) to ethylene, while another method involves fermentation reactions with yeast and sugar or starch.

The energy crisis is the main reason behind this series of events. The announcement noted that UK energy prices have doubled over the past five years and are currently five times higher than those in the US, making it impossible for the UK to maintain competitiveness under such significant cost disadvantages. Although the UK was once a powerhouse in the chemical industry, with a large pool of highly skilled labor, 10 large chemical plants have closed in the past five years, in stark contrast to the US, which has not constructed any new chemical plants during the same period.

Ineos announced its plan to close the Grangemouth ethanol plant on March 19, 2024, with execution expected in the first quarter of 2025. The company stated that this decision was made after a long review, primarily due to reduced demand for ethanol in Europe and increased import pressure from other regions, leading to continuous losses in Grangemouth's ethanol business.

Bloomberg News previously reported that in response to the energy crisis triggered by the Russia-Ukraine conflict, Europe is now purchasing ethanol from Brazil at a relatively low price, with import levels tripling compared to the past.

Sir Jim Ratcliffe, Chairman of INEOS, stated: “The deindustrialization of the UK brings no environmental benefits. It merely transfers production and emissions elsewhere. The UK, especially the northern regions, needs high-quality manufacturing and related job opportunities. We are witnessing the demise of one of our major industries, as the vitality of chemical manufacturing is being squeezed to the brink.”

Since 2024, Ineos has undergone several business restructurings. On October 8, 2024, Ineos announced that its PTA plant in Geel, Belgium faced closure due to regulatory bodies imposing unachievable environmental goals, jeopardizing nearly 600 jobs. On October 30, 2024, Ineos Styrolution announced plans to close its ABS production plant in Adiston, Ohio, with plans to commence the shutdown and retirement process in the second quarter of 2025. On December 2, 2024, Ineos announced the sale of its composites business to a private equity firm, KPS, with a post-transaction valuation of approximately €1.7 billion, expected to be completed in the first half of 2025. This business has 17 factories and 3 technical centers in Europe, North America, South America, Asia, and the Middle East, employing approximately 900 people.

Additionally, Ineos has announced several other factory closures. On April 1, 2024, Ineos completed the acquisition of Total Energies' 50% stake in Naphtachimie, Gexaro, and Appryl, which includes one of Europe’s largest steam cracking plants and related ethylene, aromatics, and polypropylene businesses. On April 22, 2024, Ineos Styrolution temporarily closed its styrene plant in Sarnia, Ontario, due to resident complaints. On June 11, 2024, Ineos Styrolution announced plans to close its styrene monomer production facility in Sarnia by June 2026, employing approximately 80 employees and many contractors. On October 24, 2024, Ineos Styrolution confirmed its decision not to restart the styrene plant, expecting to complete the closure in the early fourth quarter of 2025.