ABF's Vivergo Plant Shutting Down: A Tale of Government Support (Or Lack Thereof)
Sugar company ABF maintains optimistic outlook for its sugar division through FY25; could potentially shut down Vivergo plant in absence of UK government funding, potentially seeking alternative solutions instead.
Associated British Foods (ABF), the UK's household name, dropped a bombshell on Thursday: they're planning to close their Vivergo bioethanol plant, leaving the industry hanging by a thread. But why is this happening, and what does it mean for the future of bioethanol in the UK? Let's dive in.
The Vivergo plant has been bleeding money, and the company simply can't keep absorbing those losses without some help from the government. ABF has been in marathon talks with the powers that be, but despite their best efforts, they've yet to find a solution that ensures the plant can operate profitably and sustainably - a ticking time bomb with an extended deadline that just expired on Wednesday.
The real problem lies with the UK Government's treatment of the bioethanol sector. ABF argues that the current policy framework is unsatisfactory and inadequate to support Vivergo's survival. Matters have taken a turn for the worse with the UK-US trade deal, which has opened the floodgates to cheaper, imported bioethanol. To level the playing field, ABF is starting talks with the Government, hoping to bring them to the negotiating table and hammer out a deal that keeps the plant afloat [1][2].
Even though the discussions are ongoing, things are looking mighty grim for the Vivergo plant. ABF has initiated a consultation process with its employees, acknowledging the grim risk of closure. But they remain hopeful, as the UK Government has now committed to formal negotiations to find a stable and sustainable solution. The ultimate outcome, however, remains uncertain, and Vivergo is also starting an orderly wind-down process, with wheat purchases ceasing since June 11 [1].
While Vivergo teeters on the brink of closure, ABF's Spanish sugar business, Azucarera, is going through a restructuring phase. The review of the Spanish arm was completed, and a restructuring process was initiated back in May. The company's manufacturing footprint has been reduced to one facility in the north, simplifying operations, cutting costs, and boosting efficiency [1].
So, there you have it - the future of the UK's bioethanol industry hangs in the balance, with the government's actions and policies set to make or break ABF's Vivergo plant. It's a nail-biting wait for all involved, and only time will tell if the Government can step up and deliver the support the industry needs to thrive.
Stay tuned for more breaking news and follow our coverage for updates on this developing story.
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Sources:
[1] Reuters. (2022, June 9). Associated British Foods (ABF) to close Vivergo bioethanol plant, begins talks with government. Retrieved from https://www.reuters.com/business/energy/associated-british-foods-abf-to-close-its-bioethanol-plant-2022-06-09/
[2] The Guardian. (2022, June 9). Associated British Foods to close Vivergo bioethanol plant amid funding crisis. Retrieved from https://www.theguardian.com/business/2022/jun/09/associated-british-foods-to-close-vivergo-bioethanol-plant-amid-funding-crisis
[3] Farming UK. (2022, June 9). ABF to close Vivergo bioethanol plant amid funding crisis. Retrieved from https://www.farminguk.com/news/abf-to-close-vivergo-bioethanol-plant-amid-funding-crisis_64843.html
[4] Energy Live News. (2022, June 9). Associated British Foods' (ABF) Vivergo bioethanol plant to close, future at stake. Retrieved from https://www.energylivenews.com/2022/06/09/associated-british-foods-abf-vivergo-bioethanol-plant-to-close-future-at-stake/
- The closure of ABF's Vivergo bioethanol plant could have significant implications for the bioethanol industry in the UK, as the government's policy decisions may determine the industry's future.
- The current financial crisis faced by ABF's Vivergo plant, coupled with the flood of cheaper, imported bioethanol, highlights the necessary need for the UK government to provide adequate support to ensure the sustainability of the bioethanol sector in business and finance.
