Australian officials are frantically scouring the world for a key chemical needed for diesel truck engines to start – as a minister admits the country only has five weeks’ supply left.
Stockpiles of additive urea, a main ingredient of AdBlue, are running low globally after China this year banned exports in a bid to contain fertiliser prices – a key component of food production.
Modern diesel engines powering trucks, utes and four-wheel drives won’t start unless AdBlue has been added to the exhaust system to reduce the levels of nitric oxide pollution.
With half of Australia’s trucks having a diesel engine, that means many goods may not reach supermarket shelves this Christmas as many family cars are forced off the road.
Now Energy Minister Angus Taylor has admitted Australia’s existing supplies were likely to run out by the middle of January and has appointed a former Donald Trump adviser to help devise a solution.
Service stations are now running low on stock and are banning customers from panic buying more AdBlue than they need.
Australia is in a panic about a key chemical needed for diesel truck engines to start with a cabinet minister admitting there was only five weeks’ of supply left (pictured is a Woolworths truck in Sydney)
Now Energy Minister Angus Taylor has admitted Australia’s existing supplies were likely to run out by the middle of January and has appointed a former Donald Trump adviser to help devise a solution
Mr Taylor’s office released a statement late on Thursday night revealing Australia had 15million litres left of AdBlue in storage ‘which is equivalent to close to five weeks of business-as-usual demand’.
What is urea?
Urea is commonly used as a fertiliser but a more refined version is added to diesel engines to reduce nitric oxide exhaust fumes
This diesel exhaust fluid is marketed in Australia as AdBlue containing 32 per cent urea and 68 per cent de-ionised water
The product, injected into the exhaust system, is used in diesel cars along with civil construction and farming machinery
China supplies 80 per cent of the Asia-Pacific region’s diesel-grade urea
Source: National Road Transport Association
Shipments en route to Australia would provide another ‘two weeks of additional supply to the market.’
Mr Taylor blamed China, Australia’s biggest trading partner, for the crisis without specifically citing their export ban on refined urea.
‘Global supply pressures, stemming from increased domestic use in China, have led to international issues in securing refined urea, which is key to producing AdBlue,’ he said.
In a bizarre setback, Deputy Prime Minister Barnaby Joyce was meant to be spearheading Australia’s response to the urea crisis but he is now quarantining in Washington with Covid only a week after his advisers met with the National Road Transport Association.
In his absence Mr Taylor and Trade Minister Dan Tehan have assembled industry leaders.
‘I can assure Australians that the government is working to ensure we do not face any shortages,’ Mr Taylor said.
‘We are quickly and actively working to ensure supply chains of both refined urea and AdBlue are secure so that industry can have certainty on their operations.’
Mark McKenzie, the chief executive of the Australasian Convenience and Petroleum Marketers Association, told Daily Mail Australia his service stations, including BP, were now banning customers from panic buying more AdBlue than they needed.
‘In relation to our fuel retailers, we’re getting a bit of a run on the product at service stations for obvious reasons,’ he said.
‘We are using measures such as price to discourage bulk purchases but because it’s such a prime issue, that doesn’t seem to be deterring them either.
‘If we continue to see this behaviour, we’ll move to a strategy that prevents runout.’
Modern diesel engines powering trucks, utes and four-wheel drives won’t start unless urea has been added to the exhaust system to reduce the levels of nitric oxide pollution
Mr McKenzie said service stations had yet to resort to rationing but would stop customers from topping up jerrycans.
‘We’ll allow them to get the normal level they need to put into the AdBlue reservoir but we won’t be allowing people to fill up jerrycans and the like at service stations,’ he said.
‘It’s panic buying because they’re trying to just fill every vessel they can.’
Australian Trucking Association chair David Smith said the government was unable to guarantee AdBlue supplies beyond February 2022.
‘We were told there was no need to panic about the supply of AdBlue, but no one was prepared to back this assurance up with any numbers about AdBlue supply,’ he said.
‘The supply of AdBlue is just as important as the supply of fuel.
‘We need transparency about the stocks of material that are in Australia and the ability of suppliers to deliver the AdBlue we need throughout the first half of 2022.
‘We are already seeing suppliers restricting orders or raising prices.’
Mark McKenzie, the chief executive of the Australasian Convenience and Petroleum Marketers Association, told Daily Mail Australia service stations were now banning customers from panic buying more AdBlue than they needed.
Chemical maker Incitec Pivot supplies 10 per cent of Australia’s AdBlue and is the only Australian-headquartered company that makes urea.
It is also the only company in Australia making AdBlue from urea melt.
But in November, chief executive Jeanne Johns announced it would stop making urea and other fertilisers at its Gibson Island plant in Brisbane from December 2022, citing a failure to secure a natural gas deal.
Mr Taylor blamed insufficient natural gas supplies for low urea production in Australia.
‘This is exacerbated by the global shortage of natural gas, the essential ingredient used to make urea,’ he said.
Incitec Pivot has signalled to Daily Mail Australia a willingness to ramp up domestic production before shutting down manufacturing in a year.
DGL, a New Zealand-based chemical company listed in Australia, manufactures urea for AdBlue, using a different approach to Incitec Pivot.
China supplies 80 per cent of the Asia-Pacific’s diesel-grade urea but its National Development and Reform Commission in July announced it would crack down on fertiliser hoarding, which led to state-owned firms restricting their exports.
Mr Taylor has formed an AdBlue Taskforce featuring Andrew Liveris, the former chairman and chief executive of The Dow Chemical Company who previously adviser led former US President Donald Trump’s American Manufacturing Council
This has seen other countries scramble for supplies from alternative markets with South Korea on Tuesday signing a deal with Indonesia for 120,000 tonnes a year.
Saudi Arabia and Qatar also manufacture refined urea.
AdBlue, a diesel exhaust fluid, contains 32 per cent urea and 68 per cent de-ionised water.
Mr Taylor has formed an AdBlue Taskforce featuring Saudi Aramco director Andrew Liveris, the former chairman and chief executive of The Dow Chemical Company who previously adviser led former US President Donald Trump’s American Manufacturing Council.
James Fazzino, a former CEO of Incitec Pivot who chairs of Manufacturing Australia, will lead this taskforce that will also include Dr Cathy Foley, Australia’s Chief Scientist.