Incitec Pivot Ltd. (IPL), Southbank, Victoria, has boosted AdBlue production, producing and distributing just over 3 million liters of the diesel engine emissions reduction product across Australia in the seven days ending on Jan. 23, according to a company statement.
The milestone follows the commissioning and completion of new manufacturing capability at IPL’s Gibson Island site in Brisbane, increasing quality assurance testing to 24/7 operations, as well as a new Brisbane AdBlue terminal capable of loading the equivalent of three B Double vehicles per hour for distribution to the industry, IPL said.
The production increase is of “many multiples” compared to its baseline rates in December, and the company will report specific numbers soon, IPL Managing Director and CEO Jeanne Johns told analysts in an IPL Business Update call on Jan. 19.
Furthermore, the company aims to further increase production of AdBlue at Gibson Island in the coming weeks and months to meet Australia’s needs, but the decision announced in November last year to cease manufacturing at the plant at the end of December 2022 remains in place, IPL said (GM Nov. 12, 2021).
The company has been working closely with Australia’s Federal Government to increase manufacturing capacity of the urea used to make AdBlue solution and of AdBlue itself during December (GM Dec. 31, 2021). Country-wide shortages of technical-grade urea, which is used to make AdBlue solution, in recent weeks have been threatening to bring Australia’s transport industry to a halt.
Around 90 percent of the Australian AdBlue market is reliant on imports of technical grade urea, with China typically supplying around 80 percent of that. But supply has dried up since China put export restrictions in place on its urea exports. Australia in recent weeks has been forced to turn to the international market to alleviate some of the AdBlue supply deficit.
“Until now, this essential product for modern diesel engines has been a small by-product produced at our Gibson Island plant, and had supplied about 10 percent of the Australian market,” Johns told analysts. “Since we became aware of the urgency of the national shortage, we have worked collaboratively with the federal government to dramatically increase our production.”
IPL is the only Australian manufacturer to make the AdBlue solution from urea melt.
When Australia’s AdBlue supply shortage is less critical, the company plans to undertake a manufacturing assessment to produce technical grade urea, a granulated (non-liquid) form of urea that can be supplied to Australian AdBlue blenders to manufacture liquid AdBlue.
If the manufacturing assessment is successful, the company said it would produce technical grade urea, in addition to manufacturing AdBlue.
But IPL has emphasized that “importantly” at the same time, it has also taken steps to ensure there are no impacts on the ongoing fertilizer urea supplies to Australian farmers.
IPL’s decision to cease production at the Gibson Island plant at the end of December 2022 was due to the company “despite extensive efforts” being unable to secure “an economically viable” long-term gas supply to its plant beyond its current supply contract.
Responding to an analyst’s question whether the company’s AdBlue initiative had opened up any discussions on the importance of domestic manufacturing and possibly opening the door to an extension of the life of the Gibson Island plant, Johns said the logic behind the decision to cease production at Gibson Island hasn’t changed and “unfortunately,” the decision has stayed in place.
“The decision we made last year was a very difficult decision, and it was done after a lot of analysis in different price ranges, both urea and natural gas,” she said. “Without competitive international gas, the economic viability of the plant just does not justify the retention of keeping it open.”
“But we are really pleased to be able to help out throughout 2022 with the AdBlue supply chain issue,” Johns said.