Raw Materials and Suppliers

Our Global Procurement team has a number of mechanisms in place to assess the sustainability practices of our suppliers.


IPL has processes in place to assess potential and current contracted suppliers to ensure sustainability risks are well understood and addressed. Potential and current contracted suppliers are assessed using a questionnaire that covers environment, social and governance aspects and the Global Procurement team works with suppliers on gap closing action plans where required. Contracts between IPL and materials suppliers also contain clauses that outline Company expectations of suppliers’ workplace health, safety and environmental performance. The assessment of suppliers and close out of assigned actions is monitored through regular reporting. The IPL Supplier Code of Conduct, drafted in 2016, will be further developed in 2017.

We will deliver best cost commercial outcomes aligned with stakeholder requirements through a sustainable, systematic sourcing process and active management of supplier spend.

During the past year, IPL continued to apply BEx methodologies and risk management tools to its sustainable supply chain model, with a particular focus on engaging more of our suppliers through improved contracts with more focused KPIs. The results have included better contractor equipment standards, leading to greater energy efficiency and lowered emissions. Our procurement teams also worked to reset our cost base in challenging market conditions, with significant cost savings. 

During 2016 we continued to reduce the emissions associated with our global shipping contractors in the performance of their services for us. By using the Greenhouse Gas Emissions Rating to find more efficient shipping vessels, we are using our influence to bring change in the maritime industry by rewarding ship owners that prioritise energy efficiency in line with our values, our commitment to minimise environmental impacts, and our drive to improve our financial performance.

For the first time, as part of our engagement with our global shipping suppliers, we were also able to quantify the Scope 3 greenhouse gas emissions associated with our shipping during 2016, which was 74,423 tCO2e. Although present data collection systems do not allow us to calculate the amount of emissions avoided by our use of more efficient vessels in 2016, we are working with our suppliers to be able to calculate this in 2017.

 

Natural gas accounts for approximately 70–80 percent of the cost of ammonia manufacture.

 

Energy is an important issue for our business, particularly the supply of natural gas, which is used as both a raw material and an energy source in the production of ammonia. Ammonia is then used to make both our nitrogen fertilisers, such as urea and ammonium phosphates, and our major explosives product, ammonium nitrate, using chemical reactions. In Australia, access to competitively priced gas is a well-documented challenge for the manufacturing industry. Incitec Pivot believes that it is essential that Australia find a solution that balances the needs of supplying gas to value-adding manufacturing with those of a strong energy export market. We will continue to work with Federal and State governments on this issue.

 

In the production of both single super-phosphate fertilisers (SSP) and ammonium phosphate fertilisers, we use phosphate rock, a naturally occurring mineral rock.

At our plant at Phosphate Hill in Queensland, Australia we produce ammonium phosphate fertilisers, namely mono-ammonium phosphate (MAP) and di-ammonium phosphate (DAP). This year we sourced 2,387,556 tonnes of phosphate rock for MAP and DAP from our own phosphate rock mine which is adjacent to the plant. We produced approximately 1,000,000 tonnes of ammonium phosphates. At our Portland and Geelong plants in Victoria, Australia we manufacture SSP. The composition of phosphate rock used at these plants varies according to place of origin and presents therefore with varying levels of available phosphorus, cadmium, odour and reactivity, that is, the capability of the rock to react with sulphuric acid and release available phosphorus.

Our manufacturing plants are configured to produce SSP using a blend of phosphate rock from different sources thereby balancing the above factors to produce a product that meets Australia’s regulations with regard to available phosphorus. This year we produced approximately 384,666 tonnes of SSP using a blend of 242,258 tonnes of phosphate rock from a range of sources including Nauru, Vietnam, Togo, Christmas Island, and from our supplier, Phosphates de Boucraa SA, (a wholly owned subsidiary of Officè Cherifien des Phosphates), which included rock sourced from the Non Self Governing Territory of Western Sahara, with the latter comprising approximately one quarter of the rock blend used for SSP, and just 2.5 percent of our total rock used.

The situation regarding the Kingdom of Morocco and the status of the Non Self Governing Territory of Western Sahara is a complex one, managed under the auspices of the United Nations. We continue to monitor the ongoing developments with regard to the Non Self Governing Territory of Western Sahara. IPL has had regard to the UN Global Compact’s ten principles, OECD Guidelines for Multinational Enterprises, as well as relevant provisions of international law and Australian law. We remain satisfied that we are not in breach of either Australian law or International law, as there has been no determination by the UN or any other competent legal authority that the production and use of phosphate rock from the Non Self Governing Territory of Western Sahara is in violation of any applicable law or the Geneva Convention.

 

Over many years IPL has engaged in dialogue and enquiry with many parties on this matter. In particular, IPL meets periodically with the Australian Department of Foreign Affairs and Trade, and has had discussions with Office Cherifien des Phosphates, its supplier of phosphate rock from the Non Self Governing Territory of Western Sahara, as well as with Australian ambassadors to the Kingdom of Morocco. IPL will continue to monitor this complex situation.

 

We use sulphuric acid in the manufacture of single superphosphate, mono-ammonium phosphate, di-ammonium phosphate and granulated ammonium sulphate, and nitric acid in the manufacture of ammonium nitrate.

 

We produce sulphuric acid at our Mount Isa site in Queensland, Australia. The acid is transferred to our fertiliser manufacturing plant at Phosphate Hill by a purpose built railway and used in the production of DAP and MAP fertilisers. We source additional sulphuric acid, including for our SSP plants in Victoria, Australia, from both domestic and international suppliers. We manufacture the nitric acid we use to make ammonium nitrate explosives at our nitric acid plants in Moranbah, Australia, and St Helens, Louisiana, and Cheyenne in North America.

 

During 2015, IPL worked with suppliers, customers and industry bodies to trial a new program to collect and recycle our fertiliser packaging. In 2016, the recycling program was extended to all of our fertiliser customers across eastern Australia and has been made permanent. 

 

To establish the program we worked with our fertiliser packaging suppliers, plastics reprocessing companies, 23 local councils, the Queensland Department of Environment and Heritage Protection, and ‘Farm Waste Recovery’, a subsidiary of the Australian agricultural industry body, AgStewardship, to establish the Sugar Cane Fertiliser Bag Recovery Trial. Commencing in September 2015, the collection-and-recycling trial of fertiliser packaging was conducted across the Northern Australian sugarcane farming region, where approximately 80% of the sugarcane harvested in Australia each year is grown, and where we supply fertiliser to many cane growers. AgStewardship’s key objective is to support and develop Australian Agriculture’s environmental sustainability and stewardship, while the key objective met by the trial was to develop a sustainable model for the collection of fertiliser bags and the reuse of the recovered materials. This initiative was also supported by state and local governments, and local recyclers.

 

This year Incitec Pivot Fertilisers worked with our fertiliser packaging suppliers, plastics reprocessing companies, 23 local councils, the Queensland Department of Environment and Heritage protection, and ‘Farm Waste Recovery’, a subsidiary of the Australian agricultural industry body, AgStewardship, to establish the Sugar Cane Fertiliser Bag Recovery Trial. Commencing in September 2015, the 6 month collection-and-recycling trial of fertiliser packaging was conducted across the Northern Australian sugarcane farming region, where approximately 80% of the sugarcane harvested in Australia each year is grown, and where we supply 70% of the fertiliser needs to cane growers. AgStewardship’s key objective is to support and develop Australian Agriculture’s environmental sustainability and stewardship, while the key objective met by the trial was to develop a sustainable model for the collection of fertiliser bags and the reuse of the recovered materials that was supported by state and local governments, and local recyclers.

 

The 2015 trial was extremely successful and demonstrated the commitment of our customers to a sustainable recycling option for our fertiliser packaging. Now a permanent program, we continue to provide financial and promotional support to encourage growers to tie the bags in bundles and drop them at local council and private farm collection centres, where they are bailed for transportation to Brisbane for recycling. During 2016, 82,333 fertiliser bags were collected and recycled, which is 14 percent more bags than during the trial.

 

Not only was the volume of plastic collected in 2016 enough to make 1,300 park benches, it means tidier farms, less material going into landfill sites and less likelihood of the plastic packaging ending up in the environment.