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BHP weighing LNG power for iron ore ships, reports Reuters

Published by , Editorial Assistant
Global Mining Review,

Reuters has reported that BHP, the biggest listed miner, aims to decide early next year who has won a tender for LNG-fuelled transport to ship up to 27 million t, or about 10%, of its iron ore to cut emissions by around a quarter, a senior executive said.

Miners are under pressure to pollute less as concern for the environment grows and investors increasingly regard a compelling sustainability strategy as an indication that a company is well-run.

BHP has said it has a responsibility to address emissions as it is the biggest producer of coking coal and a major shipper of iron ore. Both generate large amounts of carbon dioxide and other emissions as they are shipped around the world and used for making steel.

Rashpal Bhatti, BHP’s Vice President for Maritime and Supply Chain Excellence said: “Decarbonisation is an absolutely paramount debate, as the largest bulk shipper in the world, we feel a distinct sense of responsibility.”

In July, the company decided a tender was the best way to assess the available expertise on engineering, tanks and refuelling in its mission to shift from conventional marine fuel.

Bhatti said the company was considering 17 detailed submissions from established companies to start-ups, and hoped to award the tender in the first quarter of next year.

Switching to liquefied natural gas (LNG) could cut carbon emissions by approximately 25%, as well as eliminating nitrogen oxide (NOX), sulfur oxide SOX and some of the particulate matter associated with conventional shipping fuel.

Bhatti said he could not be specific on the budget, but believed an LNG-fuelled vessel could be economic, with costs “on a par with or better than a conventional fuel vessel”.

The largest dry cargo ship, the Capesize vessel, cost around US$55 million (£43 million) to US$75 million annually, he said.

Some have criticised use of gas due to it not being carbon-free, but BHP had said that it is realistic in the near term.

LNG-fuelled tankers could be carrying iron ore by late 2021, Bhatti said, and in time, the tanks under consideration might also be suitable for hydrogen, which is a possible low-carbon fuel.

New standards set by the United Nations’ International Maritime Organization (IMO), known as IMO 2020, take effect next year to cut sulfur emissions. It has set a goal to halve climate warming emissions from shipping by 2050 compared with 2008 levels.

The company has a target to become net zero by 2050, in line with overall UN carbon-cutting goals.

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