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Industry allowed to collaborate on AdBlue supply arrangements

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The Australian Competition and Consumer Commission (ACCC) is allowing manufacturers and other industry stakeholders to collaborate on arrangements for the supply of AdBlue.

In a media statement late last year, the ACCC said AdBlue manufacturers are seeking to share information and work together to develop solutions to any potential future shortages of refined urea, a key ingredient in AdBlue.

“The ACCC’s interim authorisation allows AdBlue manufacturers to cooperate in a number of ways without the risk of breaching competition laws,” said ACCC Chair Rod Sims.

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

Following the interim authorisation, the parties can collaborate on issues such as sharing information about stock levels, supply channels and manufacturing opportunities, prioritising access to refined urea and AdBlue according to need (for example, to particular geographical areas or consumers), collaborating 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,” Sims said.

“The manufacturers’ co-ordination of their response with the government is an important step in providing a regular supply of AdBlue which is critical to our nation’s transportation sector, food production and the broader economy.”

Sims said AdBlue manufacturers are also required to invite the ACCC to any meetings where these issues are discussed.

Authorisation has not been sought, and interim authorisation has not be granted, for AdBlue manufacturers to share information about or reach agreements on price.

Around the same time, Incitec Pivot Limited (IPL) released a statement saying it had “quickly mobilised expert teams” to work on expanding its manufacturing capability at its Gibson Island plant in Brisbane and increase Australia’s supply of AdBlue.

IPL said the planned increase in production will not impact the supply of fertiliser grade urea for Australian farmers, following IPL successfully securing supply for the agricultural market.

While most of the urea produced is fertiliser grade used by Australian farmers, a small portion is used to make AdBlue, supplying around 10 per cent of the Australian market.

Meanwhile, Energy Minister Angus Taylor has called in the ACCC to monitor price gouging amid a shortage of the AdBlue diesel additive, reports The Australian.

ACCC chair Rod Sims said any AdBlue producers pushing up prices to exploit the national shortage could be found to be engaging in unconscionable conduct or “named and shamed”.

Sims urged anyone concerned about high AdBlue prices to contact the ACCC, saying there was a lot of competition between suppliers and an expectation for prices to rise.

DGL Group chief executive Simon Henry, the founder of the largest formulator and distributor of AdBlue, also told The Australian that the issue was that for the past 25 years, Australia had “become accustomed to a very reliable ‘just in time’ stock management system”.

“It broke,” he said. “We pushed it too hard and it snapped … Supply chain managers got very skilled at running their stocks very low, expecting materials to turn up from China … but it doesn’t anymore.”

Henry said soaring prices were the product of plants in China and Japan going offline and congested shipping channels around the word, which had created a supply crisis placing enormous pressure on the Australian model.

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