Australia to increase local urea production to avoid trucking crisis

Australia announced on Monday that it has reached an agreement with fertiliser maker Incitec Pivot (IPL.AX) to safeguard domestic supply of urea, which is required to make a diesel additive used in vehicles, as China restricts fertiliser exports to keep prices stable at home.

According to Federal Energy Minister Angus Taylor, Incitec Pivot will increase up manufacturing of technical grade granular urea (TGU), a vital component of diesel exhaust fluid known as AdBlue.

Urea is used to make diesel exhaust fluid, which is used to reduce nitrogen oxide (NOx) emissions.

Australia now has ample AdBlue stock on hand,” Taylor said, “but this deal… will enable the sale of an AdBlue product to domestic manufacturers, ensuring current supply chain interruptions have no impact on Australian enterprises.”

Early this month, the Australian Trucking Association expressed alarm about an impending AdBlue shortage, which it warned might disrupt trucking operations and jeopardise commodities movement, prompting authorities to request urea from Indonesia, Saudi Arabia, the United Arab Emirates, Qatar, and Japan.

According to Taylor, the increase in TGU production by Incitec Pivot will have no influence on agricultural fertiliser supply to local farmers or disrupt local AdBlue distribution systems.

Australia imports roughly 80% of its urea, with Incitec Pivot producing the majority of the rest.

Indonesia has volunteered to supply 5,000 tonnes of refined urea in January, enough to create around a month’s worth of AdBlue, according to Indonesian Trade Minister Dan Tehan. He went on to say that shipping companies would prioritise loading urea and AdBlue that was already on its way to Australia.

Prices for Urea, a fertiliser, have risen more than 200 percent this year due to increased demand and decreased supply, while some countries have begun restricting AdBlue as panic buying by drivers has exacerbated the shortfall.

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