the Grangemouth petrochemical plant, Scotland's biggest oil refinery, could close by the end of this year, with the loss of 800 jobs, if public cash is not forthcoming to fund a survival plan, its owner has warned.
Chemicals giant Ineos says that it has asked the Treasury for £125 million in loan guarantees and the Scottish Government for a maximum of £9m of regional selective assistance or grants as part of a bid to invest £300m in a new gas import terminal to bring in shale gas from the US.
It says it needs to find new sources of "raw materials" because North Sea gas is on the decline.
The US "feedstocks" can be brought into Grangemouth for 50% of the cost the company is currently paying for North Sea supplies.
The firm says it also needs to cut costs on the site, near Falkirk on the south side of the Forth estuary. It wants to close its final salary pension scheme, which it says has a deficit of £200m, and replace it with a money purchase scheme.
It said it had invested £1billion in the Grangemouth plant but has lost over £10m a month for the last four years, making the site "unsustainable". It warned the plant will close by 2017 without the new investment and the cost cutting scheme.
The company says all their finance needs to be approved and business plan put in place by the end of the year if the site is to remain viable.
Ineos Grangemouth chairman Calum MacLean said: "If we fail to put this survival plan in place then the chemicals assets will close in 2017. And then we would have 800 job losses - that would be massive.
"If we get the survival plan in place, there may be a number of job losses but they will be nominal.
"This needs to be resolved one way or another by the end of the year. We need to deliver the change on the site on terms and conditions and pensions, a positive reply on our applications for Government grants and loan guarantees and we need to secure feedstocks that we are going to take from the US.
"There are two reasons why the petrochemical business will fail by 2017, one is the high costs base of the site, the second is the current gases that are coming from the North Sea are declining and there is insufficient raw materials to keep the petrochemical assets running. We needed to introduce an alternative source of feedstocks as well as address our cost base."
The news came as the Unite union gave Ineos management seven days' notice of an overtime ban and a work-to-rule that will begin on October 7, as the union steps up its opposition to the alleged ill-treatment of a suspended union rep and the growing use of agency workers.
Unite members, who have already voted for strike action, remain in dispute with Ineos over the treatment of union official and Ineos employee Stephen Deans.
The company launched an investigation into Mr Deans, who is also chairman of the Falkirk Constituency Labour Party, after he was caught up in the furore surrounding the selection process to find a replacement candidate for the disgraced local Labour MP Eric Joyce.
The union is to hold a mass meeting today at the plant where Ineos workers will discuss the potential escalation of industrial action unless the company ends what it describes as "the unfair treatment" of Mr Deans.
Management were on site yesterday to discuss the survival plan with union leaders .
Mr MacLean said: "It is not helpful to have this strike mandate at the same time as we have these pretty critical issues.
"It has got to a critical point because the site has been losing £150m a year for the last four years. There is no choice now. It is change, or the assets will close."
Mr MacLean added: "Everyone must understand - this is a package deal and there is no plan B."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article