Australia is set to scale up the manufacturing of a key diesel exhaust fluid ingredient vital to keeping the country’s freight and logistics sectors on track.

The federal government and fertiliser manufacturer Incitec Pivot have struck an agreement to significantly increase the local production of urea, used in the diesel exhaust fluid AdBlue.

The company will design, trial, and, once tests are successful, scale up manufacturing of significant quantities of technical grade urea to supply the domestic market.

The urea will be manufactured at the Gibson Island fertiliser plant in Brisbane, which had been earmarked for closure by December 2022.

nergy Minister Angus Taylor said Australia currently had adequate stocks of AdBlue on hand and the agreement with Incitec Pivot would enable domestic production of technical grade granular urea (TGU).

“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 CEO Jeanne Johns said the company was working closely with the government on the “next steps to expand AdBlue supply and technical-grade urea production for the AdBlue industry”.

A group of people laughing.
The Prime Minister visited the Gibson Island plant in Brisbane on Monday, accompanied by Incitec Pivot CEO Jeanne Johns, middle, and energy minister Angus Taylor, right.(Supplied: Jared Vethaak)

Prime Minister Scott Morrison said the new deal would give the government time to search for a longer-term fix to Australia’s urea-supply issues.

“Now that we’re addressing those short-term issues, we’ll continue that dialogue on addressing those medium to longer-term issues.”

Labor’s Shadow Transport Minister Catherine King questioned why the government had not resolved the issue before it had become a crisis.

“Why did it have to reach crisis point before the government finally did something. Securing our fuel supply I would have thought was everyday business of government,” Ms King wrote on Twitter.

Despite that, the new deal has brought much-needed relief for many in the industry.

“This is a welcome relief to potential supply disruptions to AdBlue that is used in some farm machinery and on-road vehicles used by farmers,” National Farmers Federation CEO Tony Mahar said.

“We commend the federal government and minister [Angus] Taylor for acting decisively to secure domestic sources of urea for the productions of AdBlue.

“Along with the stock already on hand, new shipments secured in the last month, and domestic capabilities coming online, farmers and the agricultural sector can move back to a business as usual approach without the fear of supply chain disruptions.”

Simon Henry, chief executive of DGL Group, the parent company of Australia’s largest AdBlue producer AUSblue, said that while it was good news that there was a local option to produce urea, the industry still needed to diversify its sources.

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