ADDENDUM 6
BACKGROUND TO INEOS
INEOS Chlor is based in Runcorn, Cheshire where
we produce 80% of the UK's chlorine and caustic soda. These products
are vital building blocks in the production of most chemicals
made in the UK. Chlorine is used to purify 98% of our national
water consumption, to produce 96% of crop protection products
and 85% of pharmaceuticals. It is also a major raw material for
the manufacture of plastics. Caustic is used in every major chemical
production process and is essential to a wide range of everyday
products including soap, cosmetics, clothes, antiseptics and cleaning
products. INEOS Chlor has around 1,400 direct employees based
in Cheshire.
The manufacture of chlorine is energy intensive.
INEOS Chlor purchases energy in the form of natural gas, which
is used to produce electricity for use in the chlorine production
process (electrolysis of brine).
INEOS Chlor purchases around 250 million therms
per year of natural gas for use in the Runcorn manufacturing activities.
As such we understand we are probably in the top three of industrial
consumers (by volume) in the UK, outside the power generation
sector. Natural gas represents some 60% of the total business
variable production costs. Every penny added to the wholesale
cost of gas increases our production costs by some £2.5 million.
INEOS Fluor and INEOS Vinyls, also have operations
within the same site at Runcorn. While these businesses are not
as energy intensive as INEOS Chlor, energy is a significant cost.
More importantly, these businesses are extremely dependent on
the chemicals produced by INEOS Chlor. Runcorn site is the home
of a number of other companies including APL, BOC and High Chemicals
that again are dependent on the chemicals produced by INEOS Chlor.
INEOS Chlor and INEOS Vinyls also have manufacturing
assets located in France, Germany and Italy as well as several
smaller UK sites. The various sites consume significant amounts
of energy in the form of both natural gas and electricity.
INEOS provided written and oral evidence to
the Trade and Industry Select Committee Inquiry into Fuel Prices
between November 2004 and March 2005. In the case of oral evidence,
this was as part of the Chemical Industries Association panel
of witnesses.
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