UK to provide financial support to save its last ethylene plant

The British government said on Wednesday it will provide financial support to safeguard chemical production and hundreds of jobs at Grangemouth, the country's last ethylene plant, in a partnership with chemicals group INEOS.

Ethylene is used in medical-grade plastics and the wider chemical supply chain, including water treatment, as well as key industries such as advanced manufacturing, automotive and aerospace.

Grangemouth, in Scotland, was Britain's oldest oil refinery, but crude oil processing there ended in April. Operator Petroineos said the facility was closed after losing about $500,000 a day and becoming uncompetitive with larger, more modern refineries in the Middle East, Africa and Asia.

After the refinery closed, the plant's primary operation shifted to the production of chemicals such as ethylene.

INEOS said it was investing 150 million pounds ($201.20 million) at its Grangemouth site, backed by a 75-million pound government loan guarantee and a 50-million grant.

According to the government, the package is intended to safeguard operations at the site while improving energy efficiency, reducing carbon emissions and boosting productivity.

"The UK government's decision to step in will protect Grangemouth as a site of strategic national importance and secure 500 vital jobs in the area," said business minister Peter Kyle.

"By partnering with INEOS we are backing the plant and its long-term future, giving certainty to workers and the supply chain going forward," he added.

The chemicals sector across Europe has faced significant challenges in recent years, including high energy costs, with around 40% of remaining European ethylene capacity having recently closed or remaining at risk.

The decision to protect chemicals production at Grangemouth follows the government's announcement in August that it would not provide financial support to the struggling bioethanol industry, leaving a sector already battered by the UK's tariff deal with U.S. President Donald Trump facing imminent collapse.

-Catarina Demony/Reuters