A chemical company that will stop making AdBlue in Australia next year has agreed to ramp up production of the diesel exhaust fluid before the factory is shut.
Australia is facing a supply chain crisis after China this year banned the export of the fertiliser urea, a key ingredient in AdBlue, and the federal government is now scrambling so trucks keep running after January.
Incitec Pivot in November announced that from December 2022, it would stop making AdBlue at its Gibson Island plant in Brisbane, with chief executive Jeanne Johns blaming a failure to secure a gas deal.
The chemical and fertiliser maker supplies about 10 per cent of the Australian AdBlue market and is the only Australian manufacturer to make the solution from urea melt.
A chemical company that will stop making AdBlue in Australia next year has agreed to ramp up production of the diesel exhaust fluid before the factory is shut.
Half of Australia’s diesel trucks and many late-model utes and four-wheel drives simply won’t start without AdBlue because engine management systems require it to reduce the levels of nitrogen oxide pollution.
China has this year banned the export of fertilisers in a bid to contain food prices which has led to a global shortage of urea, the key ingredient in AdBlue.
With Australia’s existing AdBlue reserves set to run out in mid-January, Energy Minister Angus Taylor on Monday announced a deal with Incitec Pivot to ramp up production of the technical grade granular urea.
‘The ramping up of production by Incitec Pivot will be done without impacting agricultural fertiliser supply to local farmers or disrupting local distribution chains for AdBlue,’ he said.
‘This agreement is another important part of the government’s broader strategy to build supply chain resilience, which includes addressing shipping issues, ensuring local supplies of critical products and bolstering local manufacturing capability.’
Incitec Pivot didn’t feature on the government media announcement but on Friday, chairman Brian Kruger reiterated the company’s decision to close the Gibson Island plant in December 2022, and instead import fertilisers as its explores making green ammonia there instead.
Australia is facing a supply chain crisis after China this year banned the export of the fertiliser urea, a key ingredient in AdBlue, and the federal government is now scrambling so trucks keep running after January
‘This provides the potential to transition Gibson Island to a renewable manufacturing future, following our decision in November to cease operations at the end of 2022,’ he told shareholders at the annual general meeting.
‘This difficult decision was reached after being unable to secure, long-term, affordable gas supply.’
The National Road Transport Association estimates China supplies 80 per cent of the Asia-Pacific’s urea, which means alternative supplies need to be sourced from Indonesia and the Middle East.
A fortnight after South Korea signed a deal with Indonesia to supply 120,000 tonnes of urea a year over three years, Australia’s Trade Minister Dan Tehan on Monday announced the Indonesia would supply Australia with 5,000 tonnes of refined urea in January – enough to another month’s worth of AdBlue.
Half of Australia’s diesel trucks and many late-model utes and four-wheel drives simply won’t start without AdBlue because engine management systems require it to reduce the levels of nitrogen oxide pollution
‘By working closely with our partners, we have been able to secure this critical supply for Australia,’ he said.
‘We will continue to strengthen our close relationships around the world to support and further Australia’s interests.’
Mr Tehan flagged approaches to shore up supply with countries including Saudi Arabia, the United Arab Emirates, Qatar and Japan.
Korea in November sent Australia 27,000 litres of urea.
New Zealand-headquarter chemical company DGL supplies 60 per cent of Australia’s AdBlue market with most of its manufacturing done in New Zealand.
In October, DGL acquired chemicals business AUSblue, an AdBlue manufacturer and distributor based on a pure urea solution.
Last week, Mr Taylor said Australia had only five weeks left of AdBlue, with shipments bound for Australia providing enough for another fortnight.
Without new supplies, Australia would therefore run out by the beginning of February.
Incitec Pivot in November announced that from December 2022, it would stop making AdBlue at its Gibson Island plant in Brisbane, with chief executive Jeanne Johns blaming a failure to secure a gas deal (pictured, centre, is Incitec Pivot CEO Jeanne Johns with Fortescue Metals Group chairman Andrew Forrest, left, and Queensland Premier Annastacia Palaszcczuk, right)
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