AdBlue, sovereign capability and a gas-led recovery


James Riley
Editorial Director

For a government that has used advanced manufacturing, sovereign capability and a gas-led recovery as the organising principles underlying its industrial policy for the past 18 months, the sudden shortage of the diesel additive AdBlue must come as an embarrassment.

This is especially the case given that Australia’s only manufacturer of AdBlue – Incitec Pivot – announced that it would cease making the product at the end of December next year.

The reason Incitec Pivot said it would “reluctantly” stop manufacturing at its Brisbane-based Gibson Island facility is that it had been unable to secure an affordable long-term gas supply from Australian gas producers.

AdBlue blues keep on trucking. Credit: Ryan Smith, Flickr

The company announced that it would cease making the AdBlue solution on November 8.

This was a full month before the Australian government stepped in via Industry Minister Angus Taylor to announce the creation of an ‘AdBlue Taskforce’ to work across government and industry “to develop solutions to any future supply constraints”.

There is lot going on in this story and a couple of primary issues that should not be conflated.

The first is that the short supply of AdBlue is the result of global pressures in the urea market. Australia imports about 80 per cent of its urea requirements from China, which recently put caps on its exports to keep a lid on prices in its own domestic market.

Incitec Pivot says only a small proportion of the urea made at its Gibson Island plant was used to make AdBlue solution. The company says its production accounts for about 10 per cent of the Australian market requirements for AdBlue.

The second issue is that Incitec Pivot is ceasing operation of the nation’s only sovereign AdBlue manufacturing facility because it cannot get access to affordable gas.

Given how fundamentally critical the AdBlue diesel additive is to the operation of our transport and logistics, agriculture, and mining and resources sectors, this is shocking. It should fill no-one with confidence.

It underscores the parlous state of the Industry portfolio. It is instructive that the announced closure of the sole AdBlue manufacturing facility in the country went largely unnoticed, and to an inability to access affordable gas of all things.

How’s the strategic sovereign capability going? And what of the gas-led recovery? To get to a reported five-week supply of a product so critical to the basic functioning of our society is – there is no other word for it – shocking.

There have been some big brains applied to the problem via the AdBlue Taskforce, which is being chaired by James Fazzino, the chair of Manufacturing Australia and a former CEO of Incitec Pivot.

Fazzino is joined by Andrew Liveris, the former Dow Chemical Company CEO who was one of the chief architects of the government’s modern manufacturing initiative and gas-led recovery mantra. Australia’s chief scientist Dr Cathy Foley is also on the taskforce and others will follow.

At a time when the Industry focus has been on building strategic capability and sovereign capacity, when Australia has sought to bolster fracturing supply chains and to leverage its abundant reserves of natural gas, the AdBlue drama carries many worrying elements.

In a broader context, the situation does not inspire confidence in our ability to kick-start other process manufacturing ventures, specifically in critical minerals and rare earths, where Australia declares great ambition.

Do you know more? Contact James Riley via Email.

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