HS2 Compensation: Cemex Secures £30m Payout Over Birmingham Factory Closure

The High Court has ordered the government to pay nearly £30 million in compensation to Cemex UK, a major supplier of cement and concrete. The payout follows the compulsory purchase of the company’s Washwood Heath business in Birmingham, which was required for the construction of the High Speed 2 (HS2) rail project.

Key Takeaways

Cemex UK awarded £29.9 million in compensation by the High Court.
The compensation is for the compulsory purchase of its Birmingham factory for HS2.
The factory housed operations including railway sleeper manufacturing, an asphalt plant, and an aggregate supply business.
The dispute centred on compensation for the railway sleeper facility, which took two years to relocate.

The Compulsory Purchase

The transport secretary acquired Cemex’s Washwood Heath site in 2020, as the land was designated for a control centre for the HS2 megaproject. The site was crucial for Cemex, housing a factory for railway sleepers, an asphalt plant, and an aggregate supply business. The compulsory purchase order necessitated the relocation of all three operations to different sites.

Compensation Dispute

While Cemex and the transport secretary initially agreed on terms for two of the three business activities, a significant disagreement arose over the compensation for the railway sleeper facility. Cemex took two years to move this operation to a new location in Rochester, Kent, which the company described as inferior. This dispute led Cemex to take legal action against the government over the offered compensation amount.

Cemex initially sought over £59 million in compensation. However, the government contended that the company had actually made a gain of £4.5 million due to a market downturn for railway sleepers. During court proceedings, Cemex revised its estimated loss to £30.5 million, while the government’s representatives acknowledged a loss but valued it at £10.4 million.

High Court Ruling

In their final judgment, Judges Elizabeth Cooke and Peter D McCrea ruled in favour of Cemex, ordering the government to pay £29.9 million. The judges determined that Cemex was entitled to compensation covering the value of the land, relocation costs, loss of profit, professional fees, and other associated expenses under the terms of the compulsory purchase order.

The court noted that the Washwood Heath site was strategically advantageous for Cemex due to its proximity to the West Coast Mainline and its operational efficiency. An interim decision had previously highlighted concerns about the limited capacity of the new Rochester factory and the difficulty in predicting the future of Cemex’s business in this sector. The final judgment took into account projected future demand for specialist sleepers and ongoing sales to Transport for London.

Judges expressed dismay that the parties could not reach an agreement themselves, describing the case as “long and extremely complicated” with “subject matter bordering on impenetrable.”