US trade deal puts UK ethanol plant near to collapse

A US-UK trade agreement has put Britain's biggest bioethanol-producing plant on the brink of collapse, it said Thursday.

The deal in May included $700 million in US ethanol exports to Britain.

Bioethanol is seen as a cleaner form of ethanol. Production of the renewable fuel delivers several by-products including animal feed and carbon dioxide, with the latter used to help preserve packaged food and cool nuclear reactors.

Associated British Foods (ABF) on Thursday said it would start consultations with employees at its bioethanol business, Vivergo Fuels, over the plant's future -- in a move seen as putting pressure on the UK Labour government.

A government spokesperson described the announcement as "disappointing", which came one day after it "entered into negotiations with the company on financial support".

The plant in Hull, northern England, employs around 160 staff.

ABF said in an earlier statement: "We will... begin consultation with our employees.

"This process will conclude with a major decision to be made on the plant's future, which will depend on whether the negotiations deliver a credible route forwards."