AB Foods 'to close' bioethanol plant unless UK govt covers losses

(Sharecast News) - Associated British Foods said it would close its bioethanol business unless the British government was able to provide short term funding for its losses as a result of the US-UK trade deal. The conglomerate said it was starting a consultation process with the plant's 160 workers while still negotiating with officials. AB Foods claimed the deal with the US, which will allow tariff-free US ethanol into the UK, had made trading "significantly worse".

Under the deal, 19% tariffs on US ethanol would be cut to zero through a 1.4 billion-litre quota - essentially the size of the Britain's current ethanol market.

The concession on ethanol was made in exchange for the removal of 25% additional tariffs on steel and aluminium, and a quota of 100,000 cars which would be subject to a 10% duty.

ABF said that although talks with the government had started, uncertainty around the outcome meant it had stopped wheat purchases and would shut the plant before the end of its financial year on September 13.

"Unless the government is able to provide both short-term funding of Vivergo's losses and a longer-term solution, we intend to close the plant once the consultation process has completed and the business has fulfilled its contractual obligations," AB Foods said. In a statement on Thursday.

Reporting by Frank Prenesti for Sharecast.com