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(Bloomberg) — Chemicals giant Ineos has received support from the UK government to secure the future of the Grangemouth plant outside Edinburgh.
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Loan guarantees and a grant from the government will ensure that Grangemouth will remain in operation for five years, Ineos Group Director Tom Crotty told the BBC on Wednesday. The company has previously said the chemicals plant is at risk of shutting, meeting the same fate as the oil refinery on the site which closed earlier this year. Ineos bonds rose.
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Ineos, founded by billionaire Jim Ratcliffe and best known for its stake in football club Manchester United, is facing a number of headwinds including high energy costs, weaker demand and cheap imports. The group has responded by cutting costs, but billions of dollars of debt linked to the firm has slumped into distressed territory and short sellers have wagered against bonds it issued.
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Ratcliffe has long been vocal about the struggles of Europe’s chemicals industry, which has higher costs than other places like the US and the Middle East. Exxon Mobil Corp. is to close its ethylene plant at Mossmorran in early 2026, leaving Grangemouth with the only such plant in operation in the UK. Closures are contributing to deindustrialization in the Europe Union, according to the industry’s trade association.
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Ethylene is widely used in the production of plastics, as well as other products used across a range of industries.
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“Grangemouth is losing money because of the very parlous state of the European industry,” Crotty told the BBC. “Strategically, this is crucial to the UK,” he said, adding that the plant supplies materials essential for the defense, medicine and food industries.
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Under the deal, Ineos will be supported by a £75 million ($100 million) government loan guarantee and a grant of £50 million. It will use the funds to improve energy efficiency and upgrade production units.
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“At a time when British manufacturing is in decline, this investment, in partnership with the UK government, maintains the operation of Grangemouth as a critical and strategic supplier to UK industry,” Ineos and the Department of Business and Trade said in a statement.
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Grangemouth contributes more than 5% of Scotland’s gross domestic product, according to Paul Hodges, chairman of New Normal Consulting and who in the past worked for Imperial Chemical Industries, once one of the UK’s biggest employers.
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It’s not the first time that Ineos has received state backing for its operations, having secured French support for its Lavera site in southern France. Ineos announced job losses in Hull in northern England this year.
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Notes issued by Ineos Finance Plc and Ineos Quattro Finance 2 rose on Wednesday. Ineos Finance Plc €800 million bonds due 2031 rose as much as 1.7 cents on the euro to 86.6 cents, the biggest daily rise since Nov. 20, according to data compiled by Bloomberg.
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—With assistance from Bruce Douglas and Libby Cherry.
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