International Maritime Organisation Archives

BHP has awarded what it says is the world’s first LNG-fuelled Newcastlemax bulk carrier tender, with the aim of reducing greenhouse gas emissions by more than 30% per voyage.

Eastern Pacific Shipping (EPS) has been awarded the five-year time charter contract for five 209,000 DWT LNG-fuelled Newcastlemax bulk carriers to carry iron ore between Western Australia and China from 2022, BHP said. The LNG bunkering supply contract is expected to be awarded in October.

BHP Chief Commercial Officer, Vandita Pant, said the LNG-fuelled vessels would virtually eliminate SOx (sulphur oxide) emissions and significantly reduce CO2 and NOx (nitrogen oxide) emissions.

“As one of the largest dry bulk charterers in the world, BHP recognises the role we play in working with our suppliers and customers to drive actionable reductions in GHG emissions across the maritime supply chain,” Pant said.

“The tender marks a progressive shift for BHP and the broader mining and shipping industry and is a significant step toward lowering GHG emissions in the 1.5 billion tonne iron ore seaborne market.

“We expect the introduction of LNG-fuelled vessels will result in more than 30% lower CO2-e emissions on a per voyage basis compared to conventional fuel along the Western Australia to China route.”

BHP released the LNG-fuelled bulk carrier tender in July 2019 and says it completed a rigorous due diligence process to identify and short list tenderers. Safety, technical and economic factors, as well as a clear demonstration to make a sustainable positive change for the industry, were among the criteria.

Pant said EPS offered a competitive bid and an efficient vessel design with superior fuel efficiency and GHG emissions reductions. The EPS management team displayed a significant alignment of values with BHP, she added.

Pant said: “The LNG bunkering time charter contract, with a total cost of ownership less than a conventionally fuelled Newcastlemax, will enable BHP to manage the fuel supply risk, build LNG operations capability internally and capture operating expenditure benefits through optimisation of voyage operations and fuel utilisation.

“As an established provider of marine transportation to the energy market for 60 years, EPS shares BHP’s commitment to lowering emissions in the maritime supply chain and we look forward to working with them to align with the GHG goals of the International Maritime Organisation (IMO).”

EPS CEO, Cyril Ducau, said: “With aligned values and sustainability agendas, we are thrilled to work with BHP on this project. BHP’s commitment to making a positive change for the industry resonated with our decarbonisation mission and our culture of environmental protection. When these vessels deliver in 2022, they will be the cleanest and most efficient in the entire dry bulk shipping fleet and will be IMO 2030 compliant, eight years ahead of schedule.”

BHP, as part of its goal to reduce greenhouse gas emissions across its operations, has released the world’s first bulk carrier tender for LNG-fuelled transport for up to 27 Mt of its iron ore.

The company said: “Introducing LNG-fuelled ships into BHP’s maritime supply chain will eliminate nitrogen oxide (NOx) and sulphur oxide (SOx) emissions and significantly reduce CO2 emissions along the busiest bulk transport route globally.”

BHP, as part of its greenhouse gas emission reduction plans, recently signed a memorandum of understanding with Mitsubishi Development to work together in the pursuit of emissions reductions, including from the life-cycle use of marketed products.

Rashpal Bhatti, Vice President, Maritime and Supply Chain Excellence, BHP, said emissions resulting from the transportation and distribution of the company’s products represented a material source of its value chain emissions (Scope 3).

“We recognise we have a stewardship role, working with our customers, suppliers and others to influence emissions reductions across the full life cycle of our products,” Bhatti said. “Through this tender, we are seeking potential partners who share our ambition of lowering emissions to the maritime supply chain.”

The tender is open to a select group of industry leaders, from ship owners, banks and LNG fuel network providers, BHP said. “As well as LNG-fuelled transport for up to 10% of its iron ore, the tender seeks other innovative solutions that can lower greenhouse gas emissions and increase productivity from BHP’s freight requirements.”

Bhatti added: “We are fully supportive of the International Maritime Organisation’s (IMO) decision to impose lower limits on sulphur levels in marine fuels.

“While LNG may not be the sustainable homogenous fuel of choice for a zero carbon future, we are not prepared to wait for a 100% compliant solution if we know that, together with our partners, we can make significant progress now.

“This new tender adds to the work BHP is doing with customers, suppliers and parties along our value chain to influence emissions reductions from the transport and use of our products.”

The IMO ruled from January 1, 2020, that the marine sector will have to reduce sulphur emissions by over 80% by switching to lower sulphur fuels, with the current maximum fuel oil sulphur limit of 3.5 weight percent (wt%) falling to 0.5 wt%.

As well as investments in emerging technologies, BHP sets greenhouse gas emissions reduction targets for its operations, builds the resilience of its operations and communities to the physical impacts of climate change, and works across sectors to strengthen the global policy and market response, the company said.

BHP to cut iron ore freight emissions with world first LNG-fuelled bulk carrier contract

BHP looks to LNG for lower iron ore shipping emissions