Australia scrambles to resolve diesel engine supply chain crisis as Korea orders urea from Indonesia

Australia is scrambling to resolve the supply chain crisis as other countries like South Korea begin stockpiling a critical chemical needed to start diesel truck engines.

Senior cabinet ministers have urged Australians to refrain from panicking despite warnings from the National Road Transport Association that urea supplies could run out by the end of January.

China supplies 80% of the Asia-Pacific market, but it halted exports this year in an effort to contain the price of fertilizers, a key element in food production.

Fertilizer maker Incitec Pivot is Australia’s only manufacturer of AdBlue, an environmental additive needed to start modern diesel engines.

But from next year it will stop making urea at its plant on Gibson Island in Brisbane. Until then, it supplies 10% of the Australian market.

After five days of speculation, Incitec Pivot has revealed to Daily Mail Australia its promise to boost domestic production to help ease the urea supply crisis.

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Australia is scrambling to solve the supply chain crisis as other countries start stockpiling a key chemical needed to start diesel truck engines. Senior cabinet ministers have urged Australians to refrain from panicking despite warnings from the National Road Transport Association that urea supplies could run out by the end of January (pictured are Coles, Hornsby on the Sydney Upper North Shore)

Without AdBlue, late model diesel engines will not start because engine management systems require it to reduce levels of polluting nitric oxide in the atmosphere.

Half of the trucks on Australian roads have a diesel engine.

Popular utility vehicles like the Ford Ranger and Toyota HiLux and top-selling four-wheel drive vehicles like the Toyota LandCruiser are also diesel-powered.

Besides China, Indonesia, Saudi Arabia and Qatar are the other major producers of diesel-grade urea.

South Korea is bracing for a crisis, with its industry ministry ordering 120,000 tonnes a year of urea from Indonesia on Tuesday over the next three years.

that of Seoul Industry Minister Moon Sung-wook and Indonesian Minister of Public Enterprises Erick Thohir signed a memorandum of understanding on urea supply, Yonhap news agency reported.

South Korea is bracing for a crisis, with its industry ministry ordering 120,000 tons a year of urea from Indonesia on Tuesday over the next three years to bypass China by blocking exports of fertilizer needed to get started diesel engines (pictured is a truck in Seoul)

South Korea is bracing for a crisis, with its industry ministry ordering 120,000 tons a year of urea from Indonesia on Tuesday over the next three years to bypass China by blocking exports of fertilizer needed to get started diesel engines (pictured is a truck in Seoul)

Indonesia has agreed to send 10,000 tons of urea from mid-December, Korea’s industry ministry said.

What is urea?

Urea is commonly used as a fertilizer, but a more refined version is added to diesel engines to reduce nitric oxide exhaust

This diesel exhaust fuel is marketed in Australia as AdBlue containing 32% urea and 68% demineralised water.

The product, injected into the exhaust system, is used in diesel cars as well as in civil construction and agricultural machinery.

China supplies 80% of Asia-Pacific’s diesel-grade urea

Source: National Road Transport Association

“Indonesia is a nation that can be our stable supplier of urea considering its production volume, level of bilateral economic exchanges and geographical proximity,” he said in a statement.

“The two countries agreed to further strengthen cooperation on global supply chains on the road.”

Australian Deputy Prime Minister Barnaby Joyce, who is also Minister for Transport, urged Australians to refrain from panicking.

The government is aware of concerns over AdBlue supply and availability, and continues to monitor the situation while working with industry,’ a spokesperson told Daily Mail Australia.

“We encourage industry operators not to panic and to continue operating as they normally would.”

Political advisers to Mr Joyce met the National Road Transport Association on Friday, after board member and trucking boss Allan Thornley warned that the supply of urea could run out by the end January.

Energy Minister Angus Taylor insisted Australia had sufficient supplies.

“The government is working closely with industry to understand the current disruptions in the global urea market,” a spokesperson said.

“Many countries other than China manufacture urea, especially in the Middle East and Indonesia.

Without AdBlue, late model diesel engines will not start because engine management systems require it to reduce levels of smog-polluting nitric oxide entering the atmosphere

Without AdBlue, late model diesel engines will not start because engine management systems require it to reduce levels of smog-polluting nitric oxide entering the atmosphere

Incitec Pivot chief executive Jeanne Johns announced last month that it would stop making urea in Brisbane from December 2022 and import a range of fertilizers (pictured center with the chairman of the Fortescue Metals band, Andrew Forrest, and Queensland Premier Annastacia Palaszczuk)

Incitec Pivot chief executive Jeanne Johns announced last month that it would stop making urea in Brisbane from December 2022 and import a range of fertilizers (pictured center with the chairman of the Fortescue Metals band, Andrew Forrest, and Queensland Premier Annastacia Palaszczuk)

“We currently have sufficient volume in Australia to meet our needs and we are working with industry and across government to ensure we continue to have strong and resilient supply chains of essential goods.”

Incitec Pivot chief executive Jeanne Johns announced last month that it would stop manufacturing urea in Brisbane from December 2022 and import a range of fertilizers after failing to strike a supply deal in gas.

A spokeswoman said Incitec Pivot Limited only supplied 10% of Australia’s AdBlue market, but would consider increasing domestic production before the plant closes next year.

“We are fully committed to meeting the needs of our domestic customers,” she told Daily Mail Australia.

“While our ability to increase production is limited due to technical constraints, we are currently investigating increasing the capacity of our AdBlue solution and will do our utmost to increase supply over the coming months.”

Australian Deputy Prime Minister Barnaby Joyce, who is also Minister for Transport, has urged Australians to refrain from panicking (he is pictured left with Prime Minister Scott Morrison)

Australian Deputy Prime Minister Barnaby Joyce, who is also Minister for Transport, has urged Australians to refrain from panicking (he is pictured left with Prime Minister Scott Morrison)

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