BHP contracts COSCO for two ammonia-powered vessels

[Redator]

BHP (ASX, LSE: BHP) announced Wednesday it has signed contracts with COSCO Shipping Group for the charter of two ammonia dual-fuelled bulk carriers for transporting iron ore from Western Australia to Northeast Asia.

The new vessels to be built under this arrangement will be two of only a handful of vessels in the world capable of using ammonia as a marine fuel, the Australian miner said.

According to COSCO, ammonia is one of the most promising marine fuels with zero-carbon potential. Its ammonia-powered Newcastlemax vessels will stand at the forefront of technological and environmental advancement for the broader dry bulk sector.

The charter contracts for the two vessels are expected to run for five years, with first delivery anticipated from 2028.

BHP estimates that the vessels could greenhouse gas (GHG) emissions by at least 50% and up to 95% on a per voyage basis compared to a conventionally fuelled voyage, and it expects them to contribute towards a reduction in the GHG emissions intensity of the company’s chartered shipping.

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This announcement represents an important step toward lowering GHG emissions in the iron ore seaborne market and moving the maritime sector towards a decarbonized future, BHP stated, adding that it should also strengthen the demand for lower or low to zero GHG emissions marine fuels.

These contracts will also contribute to BHP’s commitment as part of the First Movers Coalition, that by 2030, 10% of the group’s total products shipped to its customers using the company’s time charter vessels be shipped using zero GHG emissions fuels.

Longstanding relationship

BHP said it selected the Chinese state-owned COSCO following a rigorous expression of interest process, which evaluated safety, technical and commercial considerations. The two companies have a longstanding relationship and will work closely together alongside key regulatory bodies to ensure the vessels are delivered and operated safely.

Meanwhile, BHP continues to work with the maritime industry to develop an ammonia bunkering plan – the process of fuelling ships with ammonia – for the two vessels when they are delivered from 2028. Sourcing lower and low to zero GHG emissions ammonia is subject to an ongoing tender process.

“This is an exciting moment for BHP, COSCO Shipping and the maritime sector,” Emma Roberts, BHP’s vice-president of maritime and supply chain excellence, stated in a press release. “Together we are contributing to the industry’s ambition towards abatement of maritime greenhouse gas emissions through these first-generation ammonia dual-fuelled vessels.”

“The contracts we are signing today—for two 210K DWT ammonia dual-fuel bulk carriers—are part of more than just a project to enable alternative marine fuels,” COSCO Shipping vice president Ji Lin said. “It also reflects the real progress being made to the Australia–China Green Shipping Corridor.”

“Looking ahead, COSCO Shipping will continue to work closely with BHP to help accelerate the transition to net-zero shipping, scale up innovation, and help shape a more sustainable and resilient global supply chain,” Lin added.