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Deal struck with Incitec Pivot to secure AdBlue

Grain Central, December 21, 2021

Australia’s stocks of the diesel additive AdBlue have run down to extremely low levels. Photo: ATA

THE FEDERAL Government has struck an agreement with fertiliser manufacturer Incitec Pivot to secure local production of refined urea for the supply of the diesel exhaust fluid AdBlue.

Minister for Industry, Energy and Emissions Reduction Angus Taylor said the move will keep the trucking industry moving and Australian diesel motorists on the road.

Under the agreement, Incitec Pivot will rapidly design, trial and, on completion of successful tests, scale-up manufacturing of significant quantities of Technical Grade Granular Urea (TGU), a critical component of AdBlue.

Incitec Pivot will supply quantities as needed by current suppliers.

AdBlue is used in modern diesel engines to control nitrogen oxide pollutants including in trucks, large passenger buses, mining equipment and agricultural vehicles.

Mr Taylor said the announcement was a step in the right direction and provides the trucking industry with certainty.

“Australia currently has adequate stocks of AdBlue stock on hand, but this agreement with Incitec Pivot will enable domestic production of TGU or supply of an AdBlue product to domestic manufacturers to ensure current supply chain disruptions don’t impact on Australian businesses,” Minister Taylor said.

“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.

“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.”

Boosting our local capabilities will be complemented by the ongoing work to secure additional supplies from international sources, to ensure we are prepared for any contingency.

Following outreach from Minister for Trade, Tourism and Investment Dan Tehan, the Australian Embassy in Jakarta has confirmed with the Indonesian Government that Australia accepted its offer to provide 5000 tonnes of refined urea in January.

This is enough urea to make around an additional month’s worth of AdBlue.

Minister Tehan said Australia is leveraging our strong relationships with our international partners to open up new sources of supply to meet our future needs for refined urea.

“By working closely with our partners, we have been able to secure this critical supply for Australia. We will continue to strengthen our close relationships around the world to support and further Australia’s interests,” Mr Tehan said.

The Government has been working with the manufacturers and the shipping companies to ensure shipments of urea and AdBlue that are already on their way to Australia to ensure they get priority for loading and delivery.

“Shipping companies have been helpful in prioritising the loading of a number of containers coming through Singapore to ensure that supplies arrive in Australia as soon as possible,” Mr Taylor said.

“I would like to thank those companies that have supported and offered support to this effort.”

This builds on work already under way by the AdBlue taskforce, led by Manufacturing Australia chair and former CEO of Incitec Pivot James Fazzino, along with former chairman and CEO of The Dow Chemical Company and director at Saudi Aramco Andrew Liveris, and Australia’s Chief Scientist Dr Cathy Foley.

The government has also engaged the National Coordination Mechanism (NCM) to ensure there is a joined-up approach and ongoing information sharing between government agencies and industry.

The government also noted that industry has raised concerns about high price of AdBlue in some areas.

The government understands that some pricing pressures may be normal in this situation, but expects suppliers to give customers a fair deal on AdBlue.

ATA warns work ahead

The Australian Trucking Association (ATA) has welcomed news the Australian Government has taken steps to boost Australia’s supply of AdBlue.

However, the ATA remains concerned that the suppliers are yet to provide facts and figures about immediate demand and supply issues.

The ATA met this afternoon with government to discuss the announcement. The ACCC authorisation for the suppliers to discuss these matters is not scheduled until this Wednesday.

ATA chair David Smith said the meeting allayed some of the ATA’s concerns.

“We are reassured by the government’s commitment to addressing the AdBlue shortage,” Mr Smith said.

“Striking a deal with Incitec Pivot to secure local production of refined urea is just common sense.

“We also welcome the negotiation with Indonesia to secure more AdBlue in January 2022.

“This will give Australia’s truck operators the breathing room they need while we wait for our local supply to increase.

“However, we have operators calling us from across Australia telling us that they’re nearly out of AdBlue.

“The ATA intends to work closely with government on contingency plans. The ATA also supports an industry proposal for an AdBlue hotline.

“We will continue to work with the government to secure a sensible solution.”

Source: Federal Government, ATA

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