European Chemicals Industry Faces Collapse Warns Ineos Boss Jim Ratcliffe

The European chemicals sector, once a powerhouse of the continent’s industrial landscape, faces existential jeopardy according to Sir Jim Ratcliffe, chief executive of Ineos. He warns that within a decade, Europe could witness the disappearance of much of its chemicals industry due to an onslaught of high energy costs, carbon taxes, US tariffs, and fierce competition from lowpriced Chinese imports.

Speaking on The Business podcast by The Times, Ratcliffe sounded the alarm, estimating that one million direct jobs could be lost, a figure that could rise to ten million when factoring in the wider service economy and supply chains. The sector has already been rocked by a series of plant closures and redundancies at major facilities across the UK and mainland Europe. Ineos itself has cut 60 jobs from its Hull Acetyls plant and recently closed operations in Germany, Belgium, France, and Spain. Other giants like Shell and BASF have withdrawn investments and announced site closures, citing unsustainable cost pressures.

Industry analysts and a report by Oxford Economics lay bare a bleak picture. European chemicals production remains below prepandemic levels and plants in France, Germany, and the UK are operating at only threequarters of capacity. Investment lags badly behind American rivals, who benefit from energy prices four to five times lower than those in Europe. On top of this, emissions trading schemes force European companies to buy permits for carbon dioxide output, creating a substantial financial burden not faced at the same level in rival regions.

Ratcliffe argues that these combined pressures leave Europe’s industry at a distinct disadvantage. Ineos’s Cologne facility bears approximately €250 million more each year in energy and carbon costs compared with a mirror site in Texas. Over the course of a decade, this diverts €2.5 billion away from potential business investments towards government coffers instead. As a result, the sector has halted dividends, frozen recruitment, and is focussing on resilience during this harsh period.

Despite the gravity of the challenges, Ineos is forging ahead with Project One, a €5 billion chemicals facility in Antwerp designed to harness cost advantages of imported US shale gas. Ratcliffe concedes that such a project would be hard to justify under present conditions, but believes it will prove viable due to its distinct energy profile. Outside of this, the consolidation of UK-based chemical processing appears inevitable, with only Grangemouth likely to survive as rival sites close or wind down in the coming years.

Ratcliffe remains confident that Ineos will avoid the kind of financial crisis it faced after 2007, highlighting a cash position of $2 billion each in Ineos Group and Ineos Quattro, and the absence of restrictive banking covenants. Looking to the future, the company’s owners are considering meritbased succession for management, separating share ownership from operational control.

The outlook for European chemicals is daunting, with high costs and regulatory burdens threatening to hollow out an industry that has been a foundational element of the region’s economic fabric for over a century.