The manufacturer responsible for the only domestic source of a critical chemical diesel exhaust fluid will close its Brisbane plant next year, despite a looming shortage threatening to disrupt Australia’s freight industry.
The company, Incitec Pivot Limited, last month announced plans to shut down its Gibson Island plant after more than 50 years of operation due to the high cost of gas. The plant makes urea, commonly used in fertiliser but also the key ingredient in diesel engine additive AdBlue.
The additive is used in reduce pollution from modern diesel engines and is needed to meet emissions standards. But there is only around seven weeks’ worth of supply left in Australia after its main supplier China capped its exports to control domestic prices amid a global shortage.
The looming shortage has led to warnings Australia’s trucking networks could grind to a halt before the end of the year. Around half of Australia’s trucks require AdBlue to operate within current emissions standards.
The federal government said urea supplies are within normal levels but has established an AdBlue Taskforce, comprising industry leaders, ministers and Australia’s chief scientist, to address the shortage.
“Global supply pressures, stemming from increased domestic use in China, have led to international issues in securing refined urea, which is key to producing AdBlue,” Minister for Industry, Energy and Emissions Reduction Angus Taylor said.
“This is exacerbated by the global shortage of natural gas, the essential ingredient used to make urea.
“I can assure Australians that the Government is working to ensure we do not face any shortages.”
Australia imports about 80 per cent of its urea stocks from China, which has capped its exports amid a global shortage to protect is domestic industries.
Incitec Pivot Limited supplies around 10 per cent of the Australian market for AdBlue solution and is the only local manufacturer to make the solution from urea melt.
The company said it will increase its production over the coming months to meet its customers’ requirements but still intends to shutter its Brisbane plant at the end of next year.
Experts have forecast Australia’s current AdBlue supply may be enough to get it through the holiday period and will allow the new taskforce time to find new supply outside China.
On Monday, Trade minister Dan Tehan said the government is approaching other overseas markets to secure more supply for Australia. Saudi Arabia, the United Arab Emirates, Qatar and Japan have all been approached, Mr Tehan said, and he is confident of securing supply from Indonesia within weeks.
“We’re confident that we will be able to have the supply going forward that we need as a country,” Mr Teahan told the ABC.
“There is obviously issues around containers, shipping disruptions, which we’re also working through. But from everything that we’ve seen there is clear supply there, which we can bring to Australia.”
Mr Tehan said there is currently no need to ration AdBlue supplies but urged companies not to hoard supply.
In early November, Incitec Pivot Limited announced it will “reluctantly” close its Brisbane-based Gibson Island plant at the end of 2022 after failing to secure affordable long-term gas supply from Australian gas producers.
“We kept our promise to pursue every possible avenue to continue with gas as a feedstock for our manufacturing operations at Gibson Island, but despite significant efforts over recent months we have been unable to secure affordable gas supply beyond the end of our current gas contract,”, Incitec Pivot Limited chief executive Jeanne Johns said.
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