As many readers would be aware, Australia has been navigating a bit of an issue concerning the availability of AdBlue in Australia. This product is used to ensure that the tailpipe emissions of modern diesel trucks comply with federal emission laws. The engine management system of these vehicles puts the vehicle into ‘limp home’ mode when the product is not present.

“In other words, much of our national truck fleet (and an increasing proportion of agricultural machinery) cannot operate without AdBlue”, said ACAPMA CEO Mark McKenzie

Under normal circumstances, Australia consumes an average of 4M litres of AdBlue per week (17.3M litres per month). This supply is derived from just under 6000 tonnes of Technical Grade Urea (or TGU), around 80% of which has historically been sourced from China.

Significant increases in natural gas prices around the world in a post-COVID environment increased production costs for producers of TGU. The quantum of this cost increase was so high that many of the world’s TGU producers elected to decrease production volumes in response. This, in turn, produced shortages in supply that were first felt in Europe in June 2021, but quickly spread to other international markets such as North America and Asia.

In October 2021, China decided to halt exports of TGU with obvious ramifications for Australian supply. Following concerns voiced by transport industry players – including some fuel distribution businesses – the Federal Minister for Industry Energy and Emissions Reduction (the Hon. Angus Taylor MP) announced the establishment of a national Ad Blue Task Force.

The Task Force sought to address the looming AdBlue supply issue on two fronts. The first was to explore options to increase ‘in-country’ production of TGU and fast track imports from other countries via diplomatic channels. The second was the establishment of an AdBlue Suppliers Working Group (SWG) to explore what could be done to ensure that the remaining stocks in the national market were managed in such a way as to avoid major outages – and keep Australia’s truck fleet and agricultural machinery moving (the fuel retail industry responded by also establishing purchase limits at service stations).

Shortly after the formation of the Task Force, Minister Taylor announced that the Federal Government had reached an agreement with the Brisbane-based operation of Incitec Pivot to increase production volumes. The process was initiated over the Christmas/New Year period and is nearing completion. The resulting benefits are already being realised, with significant volumes of AdBlue now being fed into the national market.

“At full tilt, the new arrangements will result in around 3million litres per week of AdBlue being sourced from Incitec Pivot by the end of January, with the balance of average demand to be met by imports from economies other than China”, said Mark.

Chaired by the Federal Department of Industry, Science and Resources, the AdBlue Supply Chain Working Group (SWG) has been meeting twice weekly since the week before Christmas and throughout the Christmas and New Year Period. Participants in this group have included Incitec Pivot – as the only domestic producer of TGU – as well as AdBlue manufacturers, AdBlue Suppliers, the fuel majors, and ACAPMA (as a representative of fuel distributors and independent fuel retailers).

“This group has been operating under special authorisation provided by the ACCC to identify specific areas of AdBlue shortage around the country, assess priorities and advance solutions to address shortages in priority regions”, said Mark.

What is very clear from the deliberations of the SWG this week is that, although there are some areas that continue to be low on supply, product is now flowing into the majority of the fuel retail and distribution network.

“While it is still too early to say that we are ‘out of the woods’, we are certainly in a good position and have likely averted a major crisis with AdBlue supply in Australia. Credit for this outcome can rightly be attributed to the positive leadership of the Australian Government and the goodwill of all industry players”, said Mark

“Sincere thanks also go to our fuel distribution, fuel retail member businesses (they know who they are) as well as the fuel ‘majors’ who have worked cooperatively to ensure that accurate and timely information was provided to support the deliberations of the SWG, added Mark

“While much of our national media is focussed on what is going wrong at the moment, this whole exercise is a very positive example of how ‘Team Australia’ can ‘get it right’ when industry stakeholders willingly partner with government to avert a supply chain crisis”, concluded Mark.

The AdBlue SWG will continue to meet until all stakeholders are confident that national supply has been put back onto a solid footing. It is also understood that consideration is now being given to what measures might be in place to prevent the risk of this issue ever occurring again

ACAPMA

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