Is another AdBlue shortage looming?

Australian multinational Incitec Pivot got us out the AdBlue frying pan late last year when it ramped up AdBlue production courtesy of a hefty government cash injection. However, it just might be chucking us into the fire when it stops producing the fluid in December.

In December last year the Morrison Government threw a huge amount of cash Incitec’s way to get them to bail out the country as AdBlue supplies dwindled nationwide.

The company, which is also Australia’s largest supplier of fertilisers, ramped up production by 800 per cent, producing three million litres of AdBlue in record time to keep our trucks rolling. But that was just a Band-Aid approach by the government, and now the money – like the AdBlue – is running out.

Back in January, IPL Managing Director & CEO, Jeanne Johns, said the business was committed to supporting AdBlue production.

“We have been working with wholesalers on demand forecasts to support ongoing distribution of the increased volumes of AdBlue through their network,” she said.

“We thank them for their support and look forward to continuing to work together as we increase production volumes.”

Further light was shed on the situation by an IPL press release…

“The three-million-litre-a-week milestone has been reached by expanding production of IPL’s existing method to manufacture AdBlue,” the release stated.

“This allows the final AdBlue product – a liquid form – to be directly distributed to wholesalers for distribution to the retail network.

“When Australia’s AdBlue supply shortage is less critical, IPL plans to undertake a manufacturing assessment to produce technical grade urea – a granulated (non-liquid) form of urea that can be supplied to Australian AdBlue blenders to manufacture liquid AdBlue.”

The current government recently announced that is going to spend $49.5m over the next four years to shore up supply of technical grade urea (TGU) so we’ll be ‘protected’ in the event of another shortage. But as we reported in December last year, there are precious few other companies currently converting TGU to usable fluid suitable for the trucks and other vehicles that rely upon it.

We contacted Incitec Pivot to see if that $49.5m spend had in any way changed their minds on their cessation of the production of AdBlue, and we received a rather stern reply: “Nothing has changed for us re the production of AdBlue, so there is nothing new to report.”

Could this be leading us to another AdBlue shortage? With our biggest AdBlue manufacturer quitting production, are there enough Australian AdBlue blenders to supply the country’s transport, construction and farming industries?

We then contacted the Department of Climate Change, Energy, the Environment and Water, which is responsible for the security of the country’s DEF (Diesel Exhaust Fluid) market.

We got a formal albeit somewhat informative reply telling us the situation was all under control.

“Most of the Diesel Exhaust Fluid manufactured in Australia is produced from imported Technical Grade Urea. Incitec Pivot is Australia’s only DEF manufacturer that uses its own urea to produce DEF,” the response stated.

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“There are around 15 domestic manufacturers who currently produce DEF from TGU and supply the market. While the market is currently well-supplied, we need to put in place measures to deliver certainty and provide back-up in case of disruption.

“On 15 September the Minister for Climate Change and Energy announced $49.5 million dollars in funding to implement three initiatives aimed at enhancing resilience in the Australian DEF market, including:

“Regarding the strategic stockpile, the Australian Government is committing funds to purchase 7,500 tonnes of TGU to be owned and controlled by the Commonwealth. The TGU stockpile will be used to prevent a supply crisis in the domestic DEF market.

“The competitive grants program is aimed at supporting DEF resilience in a longer disruption. This measure will see the Australian Government make a contribution to commercial aspects of a project or projects, to bring forward opportunities for sovereign manufacturing capability.”

However, the question we asked both Incitec Pivot and the government department responsible for AdBlue, the Department of Climate Change, Energy, the Environment and Water, remains unanswered: Just who are these companies and can they produce enough AdBlue to supply the whole country without risk of running short?

It seems we’ll just have to wait until the end of December to find out…