AdBlue makers can collude to solve shortages, says ACCC

The ACCC will allow manufacturers of diesel additive AdBlue to collaborate to address critical shortages of urea without running foul of competition laws.

Scott Morrison this week announced a $25m grant to Incitec Pivot to ramp up supply of AdBlue. Picture: Adam Taylor

The competition watchdog will allow AdBlue manufacturers to collaborate to fix critical shortages of the key diesel fuel additive without running foul of competition laws, as a global squeeze in the supply of a key ingredient threatens to shut down the trucking industry.

Following an urgent industry request on Monday, the Australian Competition & Consumer Competition said it had granted interim leave for AdBlue producers to share information and work together to develop solutions to any potential future shortages of refined urea.

ACCC chair Rod Sims said the “authorisation allows AdBlue manufacturers to co-operate in a number of ways without the risk of breaching competition laws”.

“This permits the industry, in conjunction with government, to co-ordinate and respond more quickly and effectively to any ­supply constraints of refined urea,” Mr Sims said.

Global shortages of refined urea emerged after China – which supplies 80 per cent of Australia’s urea needs – banned its export in a bid to tame soaring domestic fertiliser prices (urea is also used in the manufacture of fertilisers).

That left industries around the world scrambling to secure urea supplies, leading to increasingly frantic warnings from early this month that dwindling stocks of AdBlue would bring Australia’s trucking industry to a grinding halt weeks out from Christmas.

As reports emerged of companies hoarding dwindling AdBlue stocks, industry fears of an imminent shutdown were largely allayed after the government struck a $24.9m deal for fertiliser manufacturer Incitec Pivot to ramp up its production of urea, and so ­provide a guaranteed future domestic supply.

The Morrison government on December 9 established an AdBlue Taskforce to address shortages of the crucial fuel additive, which is used in diesel engines to control noxious emissions.

The task force will look at alternative offshore supply options for refined urea, building up local production capacity, and potential modifications for vehicles that have diesel engines.

But Victorian Transport Association chief executive Peter Anderson said freight operators were still facing “exorbitant prices” for AdBlue, and called on the government to work harder to encourage domestic manufacturing capacity in key goods.

“Covid has laid bare just how dependent we are on other nations for the supply of material and ­labour to keep our country running,” Mr Anderson said.

“We are seeing this play out right now with higher inflation and consumer prices because of deficiencies in our supply chains from labour shortages and delays and shortages of spare parts, raw materials and other essential inputs to keep our fleets of trucks, trains and ships running,” he said. “If we don’t attain higher levels of sovereignty with these key ingredients to support our industry, delays, shortages and higher prices will become the norm for every Australian.”

Under the ACCC authorisation, AdBlue producers would be able to meet – with a government official invited to attend – to share information about stock levels, supply channels and manufacturing opportunities, prioritise access to refined urea and AdBlue according to need (for example, to particular geographical areas or consumers), and collaborate on the production of AdBlue and implementing sales limits.

“This enables AdBlue manufacturers and the Australian government to consider the best way to respond to any potential future supply constraints,” Mr Sims said.

“The manufacturers’ co-ordination of their response with the government is an important step in providing a regular supply of AdBlue,” he added.