What needs to be done about AdBlue?

As a second potential AdBlue crisis looms with the planned closure of Australia's main production facility, we speak to industry experts about what needs to be done now to avert crisis

Just late last year Warren Clark was left deeply frustrated as AdBlue supplies were cut.

But now, the National Road Transport Association (NatRoad) CEO is feeling a sense of déjà vu.

“It’s frustrating because it was already a problem last year,” Clark told ATN. “And now we are back to worrying about it again.”

In November and December last year, the supplies of the popular diesel exhaust fluid were suddenly cut when China banned the exportation of AdBlue ingredients. Until this point, China’s exports of AdBlue had made up 80 per cent of Australia’s supply of the critical fluid.

It was only fixed when the federal government mobilised the Incitec Pivot Limited-owned Gibson Island plant in Brisbane to domestically produce the fluid en-masse. But now the federal government is announcing it will strip its recently applied funds to the Queensland plant before the end of the year, meaning supplies of AdBlue could plummet again.

The government’s latest decision is enough to annoy Clark.

“We haven’t heard anything whatsoever from the federal government,” he says. “The frustrating part is we don’t know if there is any work going on in the background.

“No one has a clue what’s going on.”

Take two

Just months after having to scramble to find a new source of AdBlue production, the Australian transport industry is now on guard yet again to find more supplies.

The issue all began last year when China banned companies from exporting urea, which is a key compound and ingredient in making AdBlue. China’s exports originally comprised the majority of Australia’s AdBlue supplies. Its absence meant the transport sector was whipped into a frenzy until the federal government intervened with crucial funding for the Incitec Pivot Gibson Island plant to take the reins of producing the majority of the nation’s vehicle fluid.

But now, the removal of funding for the Brisbane plant means it will be forced into closing. This could once again threaten the supplies of AdBlue and urea. If the substance does dry up again, Clark is concerned about the impact it will have on many of his members in the industry.

“AdBlue is essential for all Euro 5 motors onwards,” he says. “So anything made in the past 10 years that is a heavy vehicle will stop if we don’t do anything about this issue.

“The effects will be widespread across the transport sector and felt by everyone.”

The NatRoad CEO is blaming the current federal government for the potential predicament that Australia’s transport industry will find itself in if the Gibson Island plant closes later this year. He says that NatRoad initially “slingshotted the idea of a problem” to them late last year when China banned urea exports, resulting in a $29 million boost into the Brisbane facility.

Clark says no one would’ve known about the AdBlue shortage if NatRoad hadn’t alerted the government to the issue. Now, the government’s change of heart in funding what Clark calls a “band-aid solution” in the Incitec Pivot plant is threatening to plunge the industry into more murky waters.

“After funding the problem until next year the federal government then comes out and intends to shut the plant,” Clark says. “We don’t have a long-term solution and that’s what the industry needs – it needs security.

“The impacts of an AdBlue shortage will hit the majority of the larger operators, as 90 to 95 per cent of their vehicles rely on AdBlue. The problem is the exact same as it was six months ago.”

Clark remains critical of a government committee devised to find a solution for future AdBlue supplies. He says “not a lot has come out of it” and that the industry has received no updates. Clark is now fearful that the problem will once again come to a head.

The NatRoad CEO wants members of the transport industry to begin raising the issue that has the potential “to be bigger than all of and the industry as a whole”. He wants the government to find a permanent solution and says the only way to get their attention is to make a noise.

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“Everyone in the industry should not panic-buy supplies of AdBlue but, instead, begin talking about it again,” Clark says. “It’s time to talk about it and raise the issue with fuel suppliers and local politicians – unless we build momentum, we’ll hit October and worry again.

“We’ve raised the issue, now someone needs to be working to solve it and advise us about it.” 

Permanent solution needed

Clark isn’t the only transport industry member who is pessimistic about the future supplies of AdBlue. Vinh Thai is a supply chain and logistics expert at Melbourne’s RMIT University and says Australia needs to begin working on a solution to make AdBlue supplies sustainable.

“What we’ve learnt is we can’t solely rely on domestic sources, nor international supply chains, to fully source AdBlue,” Thai told ATN.

“Brisbane’s plant is currently producing around three million litres of AdBlue a week, but how sustainable is this as a temporary solution?

“If we don’t do anything then this issue won’t resolve itself by the end of the year.”

According to Thai, there are two paths Australia can take when it comes to establishing permanent supplies of AdBlue and urea. The nation can look to overseas imports, like what was previously arranged with China until diplomatic issues ceased the trade deal, or it can build more plants in Australia to manufacture the fluid.

Thai says that his preferred solution is a combination of the two, with some supplies coming from overseas while domestic plants are established for local produce.

“A two-pronged approach would be best,” Thai says. “I want to see us building domestic capabilities for AdBlue while also diversifying the international supply chain.

Supply chain expert Vinh Thai

“While we do this, we should also be building our ability to provide hydrogen-fuelled vehicles as an alternative. But establishing these hubs will take a lot of time that we don’t have right now.”

When sourcing international imports of urea, Thai urges the federal government to look at nearby countries first in the Asia-Pacific region.

“We need to look at sources of supply that are closer to home like Indonesia or Vietnam, as Middle Eastern countries are a long journey and supply chains could be exposed to much more uncertainty,” Thai says.

While this occurs, Thai also wants Australia to look at properly funding a permanent AdBlue production plant. If the Incitec Pivot plant on Brisbane’s Gibson Island is to close, then Thai has another idea in another state for a viable option.

“The plant would have to be in a state where agriculture plays a leading role, like in Victoria,” he says.

Thai, much like Clark, isn’t hopeful that the federal government will act as quickly as required due to the impending election. But when the dust settles, Thai says the issue must be acted on before the transport industry begins hurting yet again.

“No one knows what the intention of the government was when they closed the Brisbane plant,” Thai says. “But, if there’s no more international supply and we let the Gibson Island plant close, I’m pessimistic about the outcome.

“It could be really damaging news for the transport industry in our country if no action is taken soon.”

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