An emerging new construction materials manufacturing plant at Saltend has been hit by further delays and additional costs, while the price of gas has put future profitability into question.
Production at Tricoya 海角视频 Ltd - where a wood composite innovation has been touted as a significant development in the industry - is now unlikely this year, according to bosses, as partners in the consortium try to agree on new funding. Costs have soared from an original £59 million to a potential £96 million.
Early summer had seen commissioning commence at the plant, but “continued construction challenges” were experienced, with changes to the original work required.
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The details emerged in an update to the City from Accsys Technologies Plc, the business leading the joint venture project. It follows initial structural engineering issues that initiated delays and led to the loss of the lead contractor, Engie Fabricom, from the project, with Accsys taking the responsibility in-house.
The Anglo-Dutch listed firm had already ploughed further investment in, and now it is looking at a third tranche, with up to £6.9 million agreed.
A total of 30 jobs are anticipated once operational, which had first been planned for mid-2019 when announced in early 2017.
Accsys, a BP-backed legacy, taken on by Ineos as part of the acquisition of the chemicals business , has a sister plant is operational in Arnhem, Netherlands, with a third plant being built in the US.
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In the statement, the company said: “On June 30, Accsys reported that while construction was largely complete and commissioning was underway, continued construction challenges were being experienced and that rework of certain areas of the plant had been identified, both resulting in the target commercial operational date to be delayed. In addition, given these delays, we reported that the consortium's total project capital cost would be between €94-103m (£81 million to £89 million).
“Since then, T海角视频 has reduced the level of activity on site in order to reduce costs while still progressing key construction and commissioning lines, validating the remaining work - time and cost - to complete the construction and bring the plant into commercial operation. T海角视频 is also assessing the potential impact of higher gas prices on the plant's profitability, noting the continuing volatility in European gas markets.
“We now consider it unlikely that commercial operation of Hull will occur before the end of calendar year 2022. In addition, it is likely that the project costs will be higher than our previous estimate. We have continued discussion with our consortium partners regarding the consortium's funding options for the additional costs, but no agreement has been reached to date.
“Accsys has agreed a further bridging loan facility of up to €8m (£6.9 million) to enable T海角视频 to continue progressing the activities noted above whilst funding discussions are ongoing. The bridging loan facility is uncommitted, and all T海角视频 loan utilisation requests require Accsys approval.
“At this stage the Accsys board is continuing to examine and evaluate the full range of options available to it in relation to the Hull plant and a further update will be provided in due course.”
Shares closed the day 11 per cent down, at 79p.
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