CO2 shortage: Meat industry boss warns of Christmas food supplies
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The apparent crisis, which threatens industries from steel to food, is spilling over into Europe, according to one of the world’s largest distributors of the gas. Nippon Gases, which sold almost £1.1billion of industrial gases on the Continent last year, warned “other countries in Europe will also suffer shortages” of CO2. The firm has estimated that its supplies had failed 50 percent across the region.
It comes after ministers finalised a multimillion-pound bailout package to restart carbon dioxide supplies and prevent a crisis in the UK’s food and nuclear sectors.
The deal will mean that the Government will fork out tens of millions of pounds to a US fertiliser firm to reverse its decision to shut two plans which the company said had become uneconomical because of rising gas prices.
The emerging crisis prompted the British Soft Drinks Association to warn that manufacturers have “only a few days” of carbon dioxide left in reserve to produce fizzy drinks and can’t import supplies from the EU due to Brexit.
Remainers on social media celebrated the news as if a shortage of their favourite carbonated drinks provided a perfect argument against Brexit.
But Nippon’s stark warning of European shortages is being echoed across the Continent.
Yara, the Norwegian chemical group, announced last week it would slash 40 percent of its European production of ammonia – a key input for one of the most commonly used fertilisers.
Its chief executive Svein Tore Holsether said record natural gas prices were crippling the profits of European fertiliser producers.
“We’re running at a huge negative cash flow,” he warned.
“Ammonia production with today’s natural gas prices and today’s spot prices for ammonia is simply not profitable in Europe.”
Fertiliser plants are one of the Continent’s main sources of CO2, which is used to make fizzy drinks, stun animals for slaughter and cool nuclear power plants.
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Industrial gas firms are prioritising carbon dioxide supplies to end uses.
Nippon Gases said it would focus on deliveries to nuclear power stations, meat production facilities and medical firms.
Analysts have said gas prices need to fall dramatically before carbon dioxide production becomes a viable business again.
Jennifer Willis-Jones, commodity analyst at CRU, said: “The impact is massive.
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“We expect more and more shutdowns in western and eastern Europe and Ukraine.”
Allan Pickett, head of analysis at IHS Markit’s Fertecon, said fertiliser plants in the UK and northern Europe needed gas prices to be 20 percent lower than current levels to break even.
He added: “As long as gas prices remain at current levels it will be a serious situation for most European producers.”
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