Perdaman Urea Project construction begins to end supply-chain weakness

The project, located in the Pilbara, will convert natural gas from Woodside's Scarborough Gas Project into 2.3 million tonnes of urea per year.

Urea is a key ingredient in fertilisers and diesel exhaust fluid. Currently, Australia imports around 2.4 million tonnes of urea per year.

A supply-chain weakness was highlighted in the 2021-22 summer, when the country narrowly avoided a urea shortage that threatened to pull freight trucks off roads and cripple the nation's transport routes.

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It is expected just under half the urea produced by the Perdaman Urea Project will be kept in Australia, with the balance shipped to the Asia-Pacific, Brazil and the USA.

Once operational, it is hoped the project will put downward pressure rising input costs for agricultural and transport businesses by reducing the price of fertiliser and AdBlue.

The facility has already secured a 20-year offtake partnership with Incitec Pivot Fertilisers for 2.3m tonnes of urea a year.

"Our partnership with Perdaman provides IPF with significant volumes of competitive, long-term, domestic urea supply for its Australian customers and the ability to expand sales into growing global markets," IPL managing director Jeanne Johns said.

"Global market conditions and security of supply are growing challenges for farmers and the agriculture sector in Australia and globally."

The state and federal governments contributed to the project, with the Commonwealth providing more than $500m in loans.

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Resources and Northern Australia Minister Madeleine King the development would unlock significant benefits nationally and globally.

"It will provide fertiliser for Australian farmers and will support food security throughout the region and beyond," Ms King said.

"Ultimately it will help feed a great many people."

WA Premier Mark McGowan said the urea plant would create thousands of jobs and was estimated to generate a total revenue of $77b over its 40-year life.

"[This] will deliver decades of economic benefits for WA, creating local jobs and diversifying the Pilbara economy," Mr McGowan said.