Tate & Lyle's plant on the Thames at risk in EU row over sugar rules

One of London's most historic factories could be closed in a row with Brussels over import tariffs.

The American owner of the 133-year old Tate & Lyle refinery at Silvertown in East London is considering the future of the facility as it battles with the European Commission over new buying rules designed to tackle a worldwide sugar shortage.

ASR, which acquired the famous Thames-side plant from Tate & Lyle a year ago, has been hit by extra charges of £85m since the new system was introduced.

"It puts us at a significant competitive disadvantage which threatens the long-term viability of the operation," said Luis Fernandez, the co-president of ASR.

Including a sister site at Plaistow, Silvertown employs 850 people, of which 250 are contractors. Opened by Henry Tate in 1878, it survived the Blitz but since January has been running at two-thirds capacity.

Brussels is trying to ease supply constraints after cane sugar imports fell short from favoured suppliers - poor countries and the former colonies of France and Britain.

ASR argues that it should be allowed to buy on the free market without tariffs because refiners of sugar beet, which is grown in Europe, are not taxed in the same way. The company is already suing the Commission for €35m (£30m) in costs, accusing it of protectionism.

Tate & Lyle sold its sugar arm for £211m so it could focus on its sweeteners business. It licensed the brand to ASR so it could continue production of bagged sugar and Golden Syrup.

Fernandez added: "There is only so long a business can operate under these circumstances. It is a wonderful business with great people that has a real reason to exist. We are hopeful that someone will see how crazy the system is."

A Commission spokesman said: "The Commission maintains that the regulations represent a balanced policy towards the sugar market and we will outline in detail policy reasons which led to their adoption."