Liquefaction risks related to bauxite cargoes


Published: 17 March 2015

Members will be aware of the issues involving bulk mineral cargo liquefaction, which have recently been associated with bauxite cargoes originating from South Asia. New regulations have come in to force in Malaysia which members need to take note of.

The Association is grateful to Messrs. SPICA Malaysia for assistance with this update.

Bauxite cargo operation (Source: Brookes Bell)

Bulk mineral cargo liquefaction

This is a serious issue which the bulker sector has had to tackle for a significant period of time. With the early examples including coal shipments in the 1960s, in modern times the issues has been seen primarily to concern iron ore, nickel ore, fluorspar as well as bauxite cargoes. While bauxite has been brought in to a particular spot light due to a recent event involving the total loss of a vessel, including the tragic loss of a number of crew, the risk is pervasive and not confined to a particular cargo or region.

Members engaged in the trade of cargoes that may be prone to liquefaction should continue to exercise rigorous risk analysis and management. The consequence of a total loss scenario involves liabilities in the tens of millions of USD.

The Association has previously advised, in detail, on the issues and additional information and resources can be found in the "Further reading" section below.

New Malaysian regulation

Pursuant to a notice from the Kuantan Port Consortium of 9 February 2015, a new procedure was put in place for the appointment of surveyors and their entry in to the Kuantan port operational area.

As will be noted that the particular shipper has to give permission for the surveyor to attend and inspect the stockpile of cargo intended for loading on a given vessel. There are also regulations in terms of escorting and security, as well as some small charges.

We recommend that, whenever questions concerning the cargo arise, members always attempt to obtain permission from shippers to sample stockpiles. The key information to take on board, however, is that without the shipper's permission, it will not be possible to gain access to the cargo prior to it being presented to the vessel for loading.

That means that, if such permission is denied, any independent quality control will have to take place at the ship / berth side and prior to actual loading in to the cargo holds.

This is not an ideal situation as the time frame for further investigation and testing will be in practice more limited. Can tests, and visual observation of the cargo as it is brought alongside and to see it being placed in the hold (including tell-tale splatter along the sides of the holds) may in some cases not be sufficient.

Members should take this situational development in to account before fixing and arranging any voyage to load this cargo at Kuantan.

Risk management

The key to managing the risks is first and foremost an understanding of how liquefaction can occur, even for cargoes that are considered to be "safe" or "low risk". A particular combination of fine particles and water (whether natural or deliberately introduced) can have a significant impact on the physical properties of a mineral bulk "dry" cargo.

The process to be employed starts with educating both ship and shore staff (including chartering teams) as to the nature of the risk, how it can be managed, and what are the "red flags" to watch out for.

Forearmed and forewarned, management and chartering teams can make informed decisions about vessel trading and cargo lifting, and ensure that appropriate clauses are contained in contracts (in particular charterparties) that will provide flexibility as well as a stop-action capacity, to ensure vessels can remain operationally safe without legal / contractual hinderance. Close communication and co-operation with the operations team at the fixing stage will lead to a seamless transition in to the actual operation, without information gaps or knowledge deficits.

During the operations phase, the vessel needs close support and masters in particular need to have the necessary reassurance that they work with full shore backing, in particular when difficult decisions are contemplated such as a refusal to load suspect cargo, or otherwise take steps that will lead to a delay or halt in operations. Masters must, as SOLAS requires, be able to work unfettered towards the safety of the crew and the vessel.

Should issues arise, be it the lack of verifiable cargo documentation, absence of independent inspection, physical signs of cargo issues, or other factors that may impact the safety of the upcoming operation (say significant rain post arrival / issuing of cargo documentation and prior to loading), then a master must take such steps as are necessary to protect the crew and vessel. That may mean having to call a halt to operations until the situation is checked and resolved.

Further details of specific issues and advices can be found in the Association's extensive library of resources, as may be found in the next section.

Further reading

Members are asked to have further reference to the Association's previous advisory on bauxite cargoes.

Members are also encouraged to consult the further material available in Skuld's extensive resource section on bulk cargo Iiquefaction as well as the Skuld pocket guide.

For vessel specific enquiries, members are asked to contact their usual Skuld business unit.