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Sir Jim Ratcliffe’s chemicals group Ineos is seeking compensation from Belgium’s Flemish government for suspending the permit of its flagship European chemicals plant, pushing project costs up by a quarter.
The Ineos chair and chief executive told the FT that the Flemish government’s decision to suspend the permit for Ineos’ Project One petrochemical plant in 2023 had vastly increased costs at the 550,000sqm site in the Belgian port of Antwerp, although the project would still be completed at the end of this year.
“We’re having discussions with the Belgian government because we think we need compensation,” Ratcliffe said. Although he did not disclose the amount, he said the costs of the $4bn project were “purely as a consequence” of the government decision.
The Flemish government said it had formally rejected Ineos’ compensation claim for “lost time and resources”.
“The demand is unjustified and lacks any legal basis. Financial compensation for delays in a permitting procedure is fundamentally impossible,” it said.
The government added that it had always been an “extremely constructive partner” for Ineos and that “significant diplomatic efforts” were made to get local provinces to support the project.
Ineos’ Project One petrochemical plant, the first of its type in Europe in nearly 30 years, is expected to produce 1.5 megatonnes of ethylene per year. The company will import cheap ethane gas from the US as feedstock and use the ethylene produced to supply its other facilities in Europe. The facility will be the most efficient of its kind in Europe with lower emissions compared to a traditional petrochemical plant.
Ethylene is a building-block chemical used to make a vast range of products, including piping, household appliances, medication, automotive parts and packaging.
Ratcliffe was speaking to the FT at a gathering of industry leaders and European leaders including European Commission president Ursula von der Leyen to discuss the bloc’s struggling economy and heavy industries. He said that the EU’s ambitious green agenda was also responsible for the deindustrialisation of the continent.
Closures in the chemicals sector have doubled in the past year as the sector battles higher carbon costs because of the EU’s emissions trading system (ETS), which has cut greenhouse gas emissions in the power and industrial sectors by at least half compared to 2005 levels.
Ineos pays €100mn per year to cover the cost of its emissions just from its Cologne plant, Ratcliffe said. “Over 10 years, that’s a billion. With that billion, I could have invested in new technology . . . and the better [plants] are maintained, the greener they are.”
The EU’s climate commissioner Wopke Hoekstra has said blaming the EU ETS for industry woes is “intellectually lazy”.
Ratcliffe said that the US had a much better investment landscape and, as a result, greener plants because chemical companies were investing in new plants at the same time as closing older and dirtier facilities.
Although 60 per cent of Ineos’ assets are in Europe, more than half of its profits come from the US because of the structural challenges facing European industry, Ratcliffe said.
After executing an £84mn acquisition of an Antwerp chemicals facility from BP in 1998, Ratcliffe has spent the past two decades acquiring unloved assets through a series of leveraged buyouts, creating one of the world’s largest chemicals groups.
Ineos’ growth has made Ratcliffe one of the UK’s richest men, but the company is struggling under a heavy debt pile thanks to the combination of its business model and the problems facing the European industry.
Given the high energy prices in Europe, the Ineos boss also said that he would “not have a problem” buying cheap Russian gas again if it started to flow back into Europe in the event of a peace deal in Ukraine.
Additional reporting by Euan Healy