Dry bulk shipping company Star Bulk will equip its entire fleet of more than 100 vessels with exhaust gas cleaning systems before the January 1, 2020 global sulphur limit deadline imposed by the International Maritime Organization.
The Athens-based company announced Sunday that it has secured contracts with shipyards for the installation of the scrubber systems, while approximately 35% of the installations will be carried out while vessels are still at sea.
Star Bulk said it expects average cost, including installation, to be below $2 million per vessel, and added that it has secured debt financing to cover up to approximately 70% of the costs associated with the retrofits. It expects the remaining amount to be covered from operating cash flow and cash on hand, with no need to raise equity.
Star Bulk’s fleet consists of approximately 111 vessels on a fully delivered basis, representing an aggregate capacity of 12.67 million dwt. Its fleet consists of 17 Newcastlemax, 20 Capesize, 2 Mini Capesize, 7 Post Panamax, 35 Kamsarmax, 2 Panamax, 16 Ultramax and 12 Supramax vessels with carrying capacities between 52,055 dwt and 209,537 dwt. It also has call options and has sold respective put options on 4 Capesize vessels, with exercise dates in early April 2019.
Star Bulk successfully completed the first scrubber installation at sea about one month, the company said.
Star Bulk’s vessels transport major bulks, which include iron ore, coal and grain, and minor bulks, which include bauxite, fertilizers and steel products. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains executive offices in Athens, Greece. Its common stock trades on the Nasdaq Global Select Market under the symbol “SBLK” and on the Oslo Stock Exchange under the ticker “SBLK R”.
Under regulations imposed by the IMO, beginning on January 1, 2020 all ships trading internationally will be required to burn fuel with a sulphur content of 0.5% or less, a drastic reduction from the current limit of 3.5% limit. To comply with the new rules, ship owners are having to decide between burning more expensive low sulphur fuel, installing exhaust gas cleaning systems, or converting vessels to an alternative fuel such as LNG.