AB Foods threatens to close biofuel plant after US-UK trade deal

(Sharecast News) - Associated British Foods has threatened to close its bioethanol plant in Hull unless the British government provides financial support to cover losses as a result of the recent US-UK trade deal. The conglomerate said it was starting a consultation process with the plant's 160 workers while still negotiating with government officials. AB Foods claimed the deal with the US, which will allow tariff-free US ethanol into the UK, had made trading "significantly worse".

Under the deal, 19% tariffs on US ethanol would be cut to zero through a 1.4 billion-litre quota - essentially the size of the Britain's current ethanol market, "far exceeding previous US exports to the UK".

"This change comes on top of regulations that give overseas producers an unfair advantage in the British market. The operating environment is now impossible," the company said in May when the trade deal was struck amid US President Donald Trump's global tariff war.

The concession on ethanol was made in exchange for the removal of 25% additional tariffs on steel and aluminium, and a quota of 100,000 cars which would be subject to a 10% duty.

AB Foods' Vivergo bioethanol plant is the largest of two in the UK, the other is the Ensus operation on Teesside, owned by Germany's Sudzucker Group. Bioethanol is a renewable fuel and petrol substitute made from agricultural products such as grain, corn and sugar beet.

Ensus has also said it may have to shut its site because the UK-US trade agreement "fundamentally undermined its business position". American producers receive subsidies and tax credits from Washington.

ABF said that although talks with the government had started, uncertainty around the outcome meant it had stopped wheat purchases and would shut the plant before the end of its financial year on September 13.

"Unless the government is able to provide both short-term funding of Vivergo's losses and a longer-term solution, we intend to close the plant once the consultation process has completed and the business has fulfilled its contractual obligations," AB Foods said. In a statement on Thursday.

Reporting by Frank Prenesti for Sharecast.com