Interview with Steve Austin, ABC Radio Brisbane

Interviewer
Steve Austin
Subject
AdBlue
E&OE

STEVE AUSTIN: The AdBlue shortage appears to be nearing end, as millions of litres of diesel fluid produced locally. Last year, the trucking and transport industry were worried the supply of AdBlue are at critical levels. The whole supply issue started when China stopped exported urea, which is the raw material used. In the interim, the Federal Government sourced a short term supply from Indonesia. However, that supply of refined urea is yet to arrive. Then, in December, the Federal Government signed an agreement with a Brisbane based facility to produce urea and AdBlue to cover the gap. Now, production at that plant, the Incitec Pivot plant, has hit a milestone. Angus Taylor is the Federal Minister for Industry, Energy and Emissions Reduction. Minister, just what's the situation in terms of Australia when it comes to the AdBlue supply?

ANGUS TAYLOR: Well, we're shoring up the supply and we've been doing that through a dramatic increase in production from Brisbane, from Gibson Island, of AdBlue to be supplied or being supplied right across Australia. So we use about 4 million litres of AdBlue per week. We now have 3 million litres of that being produced from Brisbane. That's an 800 per cent increase in local production, and that means we can get it out to local areas, to where it's needed as quickly as possible. It's happening now. Indeed, we have a b-double leaving Brisbane or leaving the facility where it's being produced, every 20 minutes, and that's going right across Australia. So our position is vastly strengthened. We're replenishing our stocks and we're putting ourselves in a position where we know we have avoided shortages. There's been an enormous amount of work, a great tribute to the hard workers at Gibson Island who have managed to pull this off. And it does mean we're in a very strong position.

STEVE AUSTIN: It seems to be a stop gap measure. When does this sort of process end or the arrangement end with Gibson Island, with the facility here.
ANGUS TAYLOR: Well, we'll keep going as long as we need to. Obviously, there's other sources of AdBlue and we'll continue to draw on those alternative sources. But when 75 per cent of it is being produced locally from Brisbane, we can use that. We'll keep using it as long as we need to. There's no doubt that over time, supply lines will come back to a more normal situation. But we're not taking anything for granted here. We want to make sure we've got the supply we need. Look, for your listeners who aren't across this, if our supply of AdBlue was to dry up, our trucks would stop and many cars on the road would stop as well and, of course, that would be a disastrous situation. We managed to manage our way through the situation over Christmas and New Year and we're now in a very strong position.

STEVE AUSTIN: How is it made at the Incitec Pivot facility at Gibson Island? We spoke to them last year and they made it quite clear they were going to stop doing this. They only kept going because the Commonwealth asked them to continue on, but at some point they're going to get out of it altogether.

ANGUS TAYLOR: Well, that's ultimately a decision for the company. What we've made clear to them is whilst there is a need for local production, we'd like it and they've been extremely collaborative and I have to say, Incitec Pivot has been wonderful throughout this and the workers in particular have really put their backs into it and delivered and so as long as we need it, I'm very confident we can source it from there. It is at the end of the day, urea, and there is an enormous amount of production of urea. There are big supply lines. We've just had shortages of this technical grade urea that is needed for AdBlue, and that's where Incitec Pivot has been able to step up.

STEVE AUSTIN: It does show our manufacturing weakness that we're so reliant on overseas supplies and productions, and this is what happens. Is there any serious plan to actually bring the tools of production back home, not just to AdBlue, but in other areas as well, like medical supplies and the like, that have been revealed during the pandemic?

ANGUS TAYLOR: Well, we've been doing a lot of that work, and your point is a good one. We have to avoid being in a position where we're vulnerable to supply chains we can't control. Although I would say this is an illustration of Australian manufacturing at its best, that we were able to show the flexibility, fleetness of foot, to be able to switch to the production of AdBlue as quickly as we could and the logistics, because getting a b-double out of Brisbane full of AdBlue every 20 minutes has not been a trivial exercise. But it's true, we do need to make sure we have secure supply lines for critical products. That's as true for liquid fuels, I'm the Energy Minister at the end of the day, like diesel and petrol. And we've been doing an enormous amount of work with our refineries, including in Brisbane, to make sure we have those supplies we need. That's also true of other supply lines that are really critical to keep the economy going and that's a big focus of my role as Industry Minister, and that's why we have a supply chain resilience programme to invest in those supply chains where we really need to have control over our own destiny.

STEVE AUSTIN: Well, let me ask you about the company that's solving the government's problem now, Incitec Pivot. So they put out a statement in November last year saying they were reluctantly ceasing manufacturing at the Gibson Island plant here in Brisbane at the end of this year 2022, after exhaustive efforts were unable to secure an affordable long term gas supply from Australian gas producers. How is it that an Australian manufacturer and producer can't get access to Australian gas?

ANGUS TAYLOR: Well, I don't think they're saying they can't get access to Australian gas.

STEVE AUSTIN: Affordable. It's because it's pegged at international market price isn't it? 

ANGUS TAYLOR: Yes, the question always comes down to price. Australia actually has a price which is substantially lower than most places in the world right now for gas.

STEVE AUSTIN: It's all going to export markets and it's pegged to the international price. In other words, there's no advantage for local manufacturing through Australian gas.

ANGUS TAYLOR: Well, there is at the moment, but these things can change over time but we'll continue to work with Incitec and other manufacturers to make sure we've got local supply. We've got a number of projects that are in planning now to produce more local fertiliser, and we'll work with those, more local urea, which is the input to AdBlue. Ultimately, these are decisions made by companies, not by governments, and that's as it should be but we will do everything we can to try and support Australian manufacturing. We've seen some strong growth in Australian manufacturing over the last couple of years, and that's been an extremely good thing. We've got more work to do. We know that, and we'll continue to do that work.

STEVE AUSTIN: My guest is Cabinet Minister Angus Taylor. Angus Taylor is the Federal Minister for Industry, Energy, and Emissions Reduction. This is ABC Radio Brisbane. Steve Austin's my name. Angus Taylor, how did we get into this position in the first place? It looks like a fundamental structural weakness of Australia. How did we get here, where you and others needed to scramble to fix this problem?

ANGUS TAYLOR: Well, at the end of the day, we saw a rapid escalation of gas prices around the world, which we haven't seen here in Australia but we have seen in Asia, we have seen in Europe, in particular, Asia and Europe and that rapid escalation in gas prices, which is the main input for urea and AdBlue has meant countries like China have stopped, deliberately, banned exports. And countries around the world have been scrambling to get enough AdBlue and DEF, as it is called, the technical name for AdBlue. So we were in the same position as many other countries and because of the strength of our capability and local manufacturing, we were able to switch over and get more AdBlue supply quickly. So I'd say there's some real strengths there in Australia, demonstrated by this, but there are weaknesses in supply chains, and that's why we're making very strong focus or putting a very strong focus on supply chain resilience. We're investing heavily as part of the $1.3 billion Modern Manufacturing Initiative to make sure we do have those supply chains when we really need it and as I said, we're doing that in areas like diesel supply, making sure we've got local refining. We've done deals in the last twelve months with two of our refiners to make sure they're here throughout this decade. Diesel isn't going out of the market anytime soon. These are all initiatives that give us the resilience we really need.

STEVE AUSTIN: Minister Angus Taylor.