Air Products Drops U.K. Energy-From-Waste Business

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Industrial gases manufacturer Air Products and Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania) is pulling out of the energy-from-waste (EfW) sector in the U.K.

The company has announced that its EfW business segment located in Tees Valley in the north-east of England will be accounted for as a "discontinued operation" effective in the firm's second fiscal quarter. As a result, it will record a pre-tax charge in the range of $900 million to $1 billion in discontinued operations, primarily to write down assets associated with the EfW business.

The decision means work will halt on two 50-megawatt EFW plants, Tees Valley 1 and 2, both of which were at advanced stages. Tees Valley 1 (TV1) was undergoing testing and analysis at the time of the decision while Tees Valley 2 (TV2) was almost fully constructed. Last November, Air Products suspended work on TV2, letting go 700 workers, while citing technical difficulties. At the time it said: "We remain committed to completing both facilities as soon as possible".

The plants were heralded as pioneers for new plasma gasification technology, the first of their kind in the U.K. and the largest planned projects in the world. Each plant was designed to convert 350,000 tonnes of waste a year to produce enough electricity for approximately 100,000 homes.

"In previous public comments, Air Products' management has communicated the challenges with the Tees Valley, U.K. projects," it stated. "Testing and analysis completed during the Company's fiscal second quarter indicated that additional design and operational challenges would require significant time and cost to rectify. Consequently, the Board of Directors has decided that it is no longer in the best interest of the Company and its shareholders to continue the Tees Valley projects."

Seifi Ghasemi, chairman, president and chief executive officer of Air Products, added: "Air Products is focused on our core Industrial Gas business. We pushed very hard to make this new EfW technology work and I would like to thank the team who worked so diligently. We appreciate the hard work of our employees and contractors at the site, and certainly understand their disappointment in this decision. We are also disappointed with the outcome."

Steve Cason, from U.K. workers' union Unite, speaking to Gazette Live, recently said: "The last thing the company said was they weren't going to pull out, and TV1 would be finished by December. This has sent shockwaves among the contractors on site. We have lost the steelworks and Air Products' TV2 plant, now Tata is on the ropes-- it's devastating. There will be no Northern Powerhouse--we won't be making any power at this rate; it is soul-destroying."

The news comes a week after the U.K.'s largest steelmaker, Tata Steel Limited (Mumbai, India), revealed plans to sell off its entire U.K. steel business. The move puts thousands of jobs at risk, including around 4,000 at the company's Port Talbot steelworks in Wales--the largest U.K. steel plant. For additional information, see March 31, 2016, article--Tata Steel to Sell Struggling U.K. Operations.

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