Brief summary re Aus urea crisis & STX - source The Assay...

Brief summary re Aus urea crisis & STX - source The Assay 21/12

Urea Crisis Threatening Australia’s Mining Sector:

Ready to strike

Meanwhile, the strategic significance of Strike Energy Limited’s (ASX: STX) Project Haber has been recognized at both a state and federal level in terms of generating a material domestic urea manufacturing capability.

The project was recently awarded Lead Agency Status by the Western Australian government. Concurrently, Strike has been awarded an A$2M grant by the federal government as part of the Supply Chain Resilience Initiative.

Strike has a cooperation agreement with the Mid West Ports Authority to progress access to the Geraldton port and associated facilities for urea shipping.

The firm is planning to complete engineering studies in 2022 and starting construction in early 2023.

Meanwhile, Leigh Creek Energy (ASX: LCK), which has been identified a future key supplier of urea through its A$2.6B Leigh Creek Energy Project in South Australia, is exploring optionality to produce domestic AdBlue.

The Leigh Creek Urea Project (LCUP) will be Australia’s first fully integrated urea plant with an initial output of 1M tonnes per annum (with potential to increase to 2M tonnes per annum) that will create a low-cost nitrogen-based urea.

Managing Director Phil Staveley, said the Leigh Creek Urea Project (LCUP) is set to become Australia’s largest urea project.

“Due to its fully integrated nature, the carbon neutral LCUP is in a unique position to create diverse urea-based products onsite, which can include AdBlue,” Mr Staveley said.

“The current AdBlue crisis has only further highlighted the importance of domestic urea production and the ability of the LCUP to play a major role in addressing supply chain and foreign exchange and global commodity price issues that several local industries currently face.”

“The problem is exacerbated by the anti-fossil fuel lobby that has meant there has been less investment in gas exploration. You can’t find gas if you don’t explore for it. So with little money being committed to exploration the chances of finding new gas supplies almost becomes non-existent.

“With gas demand increasing and supply become more problematic the cost of gas has to increase. If the cost of gas increases or if supply diminishes then industries that rely on gas have a major issue.

Urea is just one of a number of products that are made from gas. So as gas prices increase, and urea prices increases, the Adblue shortage simply becomes another victim of the increasing gas prices,” Mr Staveley said.