New freight fuel rules give edge to Australian iron ore

Matthew StevensColumnist

Jun 20, 2019 — 12.00am

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BHP Group has effectively confirmed that the 2020 introduction of new global emissions standards for shipping fleets will enhance the competitiveness and potentially the financial returns of Australia’s ebullient iron ore industry.

In a blog to be published on its Prospects website on Thursday morning, BHP has estimated that the expense of retro-fitting of ships and higher fuel costs will add between $US2 to $US3 a tonne to the price of shipping iron ore from the Pilbara to China.

But BHP reckons that the new International Maritime Organisation (IMO) regime, which bans the use of the high sulphur bunker oils that are presently the standard fuel across the shipping industry, will add between $US3 to $US5 a tonne to shipments from Brazil.

BHP’s vice president of market freight, Rashpal Bhatti, introduces his cost forecasts with the observation that “if the shipping industry were a country, it would be the sixth largest emitter of CO2 on the planet”.

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The new IMO rules, that will come into effect from January 1 next year, require an 80 per cent reduction in sulphur emissions. Achieving that mark will be a cat killed many ways, from adding scrubbers to exhaust systems to embracing fuels new to shipping like liquefied natural gas, biofuels blends and eventually possibly hydrogen

As a side note ... fmg really is setting itself up For the future by investing into hydrogen tech, exciting to think of fmg as a leader of hydrogen as a resource/commodity