Britain's largest chemical plant will remain open after Ineos secured more than £120 million of government aid in a deal designed to protect around 500 jobs at the Grangemouth petrochemicals site.
The rescue package will keep the Ineos Olefins and Polymer facility running after the future of the strategically important site was thrown into doubt earlier this year. The Government and Ineos together will invest around £150 million in the plant, which ministers have designated as critical national infrastructure.
Sir Keir Starmer said the intervention demonstrated the government's commitment to protecting industrial jobs and supporting manufacturing.
The Prime Minister said, “When we said we would protect jobs and invest in Britain's future, we meant it – and this is the proof.” “Through partnership, determination and our modern industrial strategy, we are delivering new opportunities, new investment and security for the next generation of workers in Scotland.”
Ineos founder and chairman Sir Jim Ratcliffe welcomed the funding, calling it “vital support” for UK manufacturing, despite his previous criticism of Labour's energy and investment policies.
Under the terms of the agreement, Ineos has given assurances that public funds will only be used to improve the Grangemouth site. The deal also gives the government the right to share in any future profits generated from the facility, providing some protection for taxpayers.
Ratcliffe said: “Through this partnership, Ineos and the UK Government have demonstrated their commitment to operating the site and maintaining jobs. The agreement includes safeguards to protect taxpayers' money and ensure that funding is used to strengthen the long-term future of the plant.”
The company said it had already spent more than £100 million maintaining operations at Grangemouth over the past year. However, the rescue came after Ineos closed its ethanol manufacturing facility and oil refinery earlier this year, citing high operating costs.
Business Secretary Peter Kyle said the deal would provide much-needed certainty for workers and the wider supply chain.
“The UK Government's decision to take action will protect Grangemouth as a site of strategic national importance and safeguard 500 vital jobs in the area,” he said. “By partnering with Ineos, we are supporting the long-term future of the plant.”
The announcement comes amid a difficult period for the UK chemicals sector, which has seen a number of closures and cutbacks. Earlier this month, ExxonMobil confirmed plans to close its Mossmoran ethylene plant in Fife in February after not finding a buyer, putting more than 400 jobs at risk.
Exxon said the closure reflects the challenges of operating in the current UK economic and policy environment, citing high costs, market conditions and plant efficiency. Exxon's UK chairman Paul Greenwood has warned of “complete devastation” for Britain's refining sector, pointing to rising carbon costs not faced by foreign competitors.
Refining and chemicals are not currently covered by the UK carbon border tax, due to be implemented in 2027, which aims to protect domestic industry by imposing an equivalent carbon cost on imported goods.
Against that backdrop, ministers hope the Grangemouth deal will signal a more interventionist approach to protecting strategically important industries – even though widespread questions remain over the long-term competitiveness of UK energy-intensive manufacturing.
