Major crisis in five months

An alarming AdBlue shortage hit the country late last year, raising fears that up to half of Australia’s truck fleet, representing tens of thousands of vehicles, could be taken off the road.

The problem was caused by a worldwide shortage of urea, a major ingredient in diesel exhaust fluid (DEF) – also known as AdBlue – and a major component in fertilizers.

A major factor in the supply disruption was the fact that China – which previously supplied 80 percent of Australia’s urea supplies – recently banned exports of the product in order to drive down fertilizer prices domestically.

The shortage caused panic as AdBlue is injected into the exhaust systems of modern diesel vehicles to reduce emissions, which are a mandatory requirement for trucks, private vehicles and tractors.

That crisis was eventually turned away after the former government awarded fertilizer Incitec Pivot $29.4 million to produce additional AdBlue stocks.

However, the company previously announced that it would stop AdBlue production at its Gibson Island Brisbane plant by the end of 2022, and the company has since doubled down on that decision.

It means that when the Gibson Island facility closes in just five months, Australia will be completely dependent on AdBlue imports – a potentially devastating position to be in, given the world’s ongoing supply chain nightmares.

A spokesman for the Secretary of State for Energy and Climate Change, Chris Bowen, recently told the: Financial Overview that there were “no predicted shortages” of DEF and that Australia now has “additional supply chain diversity from countries other than China”.

However, Cam Dumesny, director of the Western Roads Federation, told news.com.au that Australia could no longer rely on other countries to fill the gap.

“With the closure of Incitec Pivot, whatever we come up with as a nation, we need to take care of the onshore production of the base agent. We cannot depend on overseas deliveries, especially because of the continuous disruption of supply chains,” he said.

“It is necessary to bring sovereign capacity back to land.”

Dumesny said he did not blame the newly elected Albanian government for the ongoing problem, but said the nation was facing a crucial “deadline” that could no longer be ignored.

“We can’t rely on foreign countries anymore…it’s a perfect storm at the moment,” he said.

He added that while it was possible to disable the additive, it would immediately void warranties, meaning manufacturers and insurers would not cover any damages.

News.com.au understands that turning off the additive could also expose companies to crushing fines of potentially six figures.

“The risks of emissions fines are huge – it’s an essential ingredient today and AdBlue has reduced truck emissions by 95 percent,” he said.

“It does a powerful job and is part of that essential energy mix.”

It was a sentiment echoed by Simon O’Hara, CEO of Road Freight NSW, who recently told news.com.au that the AdBlue problem remained a major concern for the industry.

“AdBlue continues to be a problem for us. Incitec Pivot is expected to close in December… and it’s not that far off,” he said.

“The problem for us is that if we don’t have a local factory that produces high-quality urea for use in AdBlue, we will face the same situation [as last year] coming December of this year, because urea is also used in fertilizer… and we see food supply problems worldwide, it has a knock-on effect with increased fertilizer demand.

“Even now that the Incitec Pivot factory is shutting down, I fear that 12 months later we will have the same problem with the supply of AdBlue.”

Mr O’Hara said it was essential to have a plan to produce AdBlue domestically.

“One thing is clear: there is a shortage of AdBlue worldwide and relying on shipments from abroad may not be enough,” he said.

“We can’t turn it off, so half of the Australian truck fleet would have to shut down, and we certainly don’t want that to happen during a supply chain crisis.”

He said the Morrison government’s Incitec Pivot grant was a “stop gap measure” that simply “stopped the end of this year.”

“Something has to be done,” he said. “We need the resources to produce it ourselves through government grants or whatever… to make sure we keep producing it locally – it’s something we need to do,” warned Mr O’Hara.

“We don’t want to end up in the same situation again where we suddenly find ourselves with literally a few weeks [supply] roll up our sleeves.”

The president of the Victorian Farmers Federation, Emma Germano, agreed.

“Our reliance on imported inputs makes us very vulnerable,” she told news.com.au.

“We need a long-term strategy to ensure a safe supply of critical inputs such as AdBlue, fuel and fertilizer,” she said.

“Recent events show that Australia cannot afford to continue with a just-in-time approach.”