L Relative Costs of U.S. and Foreign Nodule Transport Ships April 1978 A contract report prepared for: U.S. DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration Office of Policy and Planning Marine Minerals Division a o u o a <5 Relative Costs of U.S and Foreign Nodule Transport Ships April 1978 Prepared by Benjamin V. Andrews, II Menlo Park, California for U.S. DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration Office of Policy and Planning Marine Minerals Division Rockville, Maryland Contract 7-13775 National Oceanic and Atmospheric Administration Office of Marine Minerals ABSTRACT: This contract report contains the results of a study to identify the relative cost differences of U.S. and foreign transport ships of the types which could be used to transport manganese nodules from a deep seabed mining area to shore for processing. This study was performed for the Marine Miner- als Division (MMD) of NOAA's Office of Policy and Planning as an extension of a MMD project to assess the potential environmental, social, and economic im- pacts of manganese nodule processing activities. This study is based, in part, on information from the published contract report Description of Manga - nese Nodule Processing Activities for Environmental Studies (three volumes) . This report considers relative costs of acquiring and operating nodule trans- port ships which are U.S. built and operated, foreign built and U.S. operated, and foreign built and operated. It estimates total costs for a typical nodule transport service in the Pacific Ocean, including consideration of world and U.S. shipbuilding prices, capital cost recovery, nodule handling equipment, cargo transfer facilities, crew and passenger accommodations, wages and bene- fits, insurance and reserves, maintenance and repair, overhead and administra- tion, fuel and port charges, and typical routes and operating schedules. AVAILABILITY: The report is available through the U.S. Department of Commerce's National Technical Information Service (NTIS) , 5285 Port Royal Road, Spring- field, VA 22151 (telephone: 703-557-4600) . Other related reports available through NTIS (order by accession number when given) include: Description of Manganese Nodule Processing Activities for Environmental Studies (three-volume set: PB 274 912/SET) , and per volume as follows: Volume I, Processing Sys- tems Summary (PB 274 913/AS) ; Volume II, Transportation and Waste Disposal Sys- tems (PB 274 914/AS) ; and Volume III, Processing Systems Technical Analyses (PB 274 915/AS) . NOTICE: The findings compiled in these reports, and interpretations expressed therein, do not necessarily represent the viewpoints of the National Oceanic and Atmospheric Administration or the United States Department of Commerce. The United States — while making this information available because of its ob- vious value and in the public interest — assumes no responsibility for any of the views expressed therein. The National Oceanic and Atmospheric Administra- tion does not approve, recommend, or endorse any proprietary product or pro- prietary material mentioned in this publication. No reference shall be made to the National Oceanic and Atmospheric Administration that would imply — directly or indirectly — that the National Oceanic and Atmospheric Administra- tion approves or disproves of the use of any proprietary product or proprietary material mentioned herein. n BENJAMIN V. ANDREWS 1460 BAY LAUREL DRIVE • MENLO PARK, CALIFORNIA 94025 (415) 323-4055 PREFACE This report had been prepared for the Office of Marine Minerals of the National Oceanic and Atmospheric Administration of the Department of Commerce under Contract 7-73775 of June 24 , 1977. NOAA has undertaken the Deep Ocean Mining Environmental Studies (DOMES) project studies to assess the potential impacts of deep ocean mining of manganese nodules in the Central Pacific, and to develop environmental safeguards. In a comple- mentary series of projects, a three-phase program is underway to assess the environmental and social and economic impacts of other activities associated with the nodule mining industry, including processing, waste disposal, and ship and land transportation. This report is a small part of the first phase studies, and includes all the material prepared under this contract. This study was conducted and report written by Benjamin V. Andrews, a consultant and naval architect in Menlo Park, California. Important contributors to the cost data prefer to remain unidentified, however their significant assistance is gratefully acknowledged. Project monitors at NOAA were Mr. Amor Lane and Mr. Karl Jugel, whose cooperation and advice accelerated the performance of this analysis and is most appreciated. August 19, 1977 in I I en r> c <-\ •H # Tl en r- rd •H co ^ P .H Eh *» M-l C en rd a u ^ • fd en u o rH CD I s - o •H p ^ p • CN p w TJ ■« rd rH e CD ro iH rd CD m CD fd CD A H H -p en fd CD > U) T3 ■» c ^ CD • CD 13 a, ^ ^ K fd U •H p cp rH u M-i c fl CD p P rd rH IH c ts fd C rH - n ^ o ^ T3 1 U s: ^r IT) rd lo - • s iH 00 "tf fd rd -^ H p • -p c in LD rd CD fd ro t> e s: CD CD •H Ti > H H ft c CD a; CD •H fd ■H p a, XI x: Sh X 0) K. u to CD ^ rd x: P p u CD rH ft C •H CD p «. 3 T3 'O X! u fO >i 1 - CD CD Sh CD r» s is H W CX) H 3 CD a O rH C - CD W fd B en CD ft rd ^ ,c >i rd CD E-" £1 ^ .Q x; m * IV TABLE OF CONTENTS Preface iii I I ntroduction and Sum mary Background 1 Method of Approach 2 Summary 5 Conclusions 11 II Construction Cos ts Nodule Characteristics 15 Ship Types 16 Nodule Handling 16 Ship Characteristics 17 World Ship Construction Prices 22 U.S. Shipbuilding Prices 25 Capital Cost Recovery 26 Ship Selection 29 III Eq uipment for Nodule Transport Shi ps_ Equipment for Comparable Standard Ships 31 Nodule Handling Equipment 35 Passenger Accommodations 41 Total Nodule Transport Ship Yard Costs 41 IV Operating Costs Crew Size 45 Wages and Benefits 47 Subsistence 47 Stores, Supplies and Equipment 49 Insurance and Reserves 49 Maintenance and Repair 51 Overhead and Administration 53 Transportation 53 Fuel and Lubricating Oil 55 Port Charges 55 V Voyage Simulation s Routes and Ports 59 Port and Ship Cargo Transfer Facilities 60 Schedules and Performances 62 Slurry Transport Ship Daily Costs 64 Slurry Transport Cost Comparisons 67 Conventional Handling System Costs 67 VI References 69 V TABLES 1-1 Early 1977 shipyard price estimates for ore-carrying ships . . 6 1-2 Manganese nodules handling equipment costs on ships 8 1-3 Comparison of ship operating costs 10 1-4 Nodule shipment cost comparisons (slurry loading) . 12 1-5 Nodule shipment cost comparisons (dry conveyor loading) 13 II-l Nodule weight-volume measures ... 15 II-2 Commodity storage factors 15 II-3 Typical combination ship dimensions 19 II -4 1970-77 yard sales price, standard bulk ship . . . 2 5 II-5 Capital cost recovery assumptions 27 II -6 Ships selected for cost comparisons 2 8 III-l Additional equipment expected to be provided on U.S. nodule transport ships 33 III-2 Cost estimates for additional equipment expected on foreign ships 36 III-3 Manganese nodule handling equipment costs on ships 40 III-4 Manganese nodule transport ships costs . 42 IV-1 Bulk ship manning schedules 46 IV-2 Total number crew 46 IV-3 Sample ship manning costs by country 47 IV-4 Subsistence costs ....... 49 IV-5 Port charges 58 V - 1 Selected nodule transport voyages 60 V-2 Estimated nodule handling rates and total port time 61 V-3 Nodule transport ship service 63 V-4 Slurry nodule transport ship daily costs 64 V-5 Distribution of underway daily cost elements ... 65 V-6 Dry whole nodule shipment cost comparison 68 FIGURES II- -A Typical combination sh versus deadweight II- -B Comparison of deadweig II- -C Typical combination sh versus speed and p II- -D 1977 Shipyard prices f IV- -A Total annual wages and IV- -B Total annual stores an IV- -C Total annual insurance IV- -D Total annual maintenan IV- ~E Total annual overhead IV- -F Fuel and lubrication o V- -A Nodule slurry transpor ip--pr incipal dimensions tonnage 18 ht-draft relationships ... 20 ips--deadweight tonnage ower 21 or bulk ships 23 benefits by country .... 48 d supplies cost 50 and reserves costs 52 ce and repair costs 54 and administration costs . . 56 il consumption rates .... 57 t costs 66 VI INTRODUCTION AND SUMMARY BACKGROUND The deep ocean mining of manganese nodules may begin in exploratory volumes within a few months, and possible large scale commercial mining could commence in the early 1980s. The mining sites of commercial interest are usually in international waters beyond the jurisdiction of any country. Vessels will be needed to transport nodules from the mining ship to a marine terminal and ultimately to a processing plant for recovery of nickel, cobalt, copper, and in some plants, manganese. The costs of acquiring and operating the ore transport vessels will depend upon where they are built and the nationality of the operators. The purpose of this study is to estimate these cost differences. Throughout the Merchant Marine Act of 1936, commerce is described as domestic when it is between ports of the United States and it territories, or alternatively as foreign when between foreign ports or between United States and foreign ports. Locations on the high seas are not defined as ports of any nationality. Only American owned, built, and manned ships may be used in domestic commerce. Any foreign ship, and American ships, can engage in foreign commerce. Ameri- can ships in foreign commerce may qualify for construction and operating subsidies. If the nodule carriage to land is defined as a United States domestic cargo movement, then no foreign ship may carry the nodules to United States ports without a waiver; that is difficult to obtain. U.S. ships in domestic trade are not eligible for any construction or operating subsidies, and must be essentially completely built in the United States, manned by Americans and owned by U. S. citizens. Title XI of the 1936 Merchant Marine Act provides Federal Ship Financing Guarantees which should be available to assist operators in obtaining reasonably priced, long term ship financing. However the use of a Capital Construction Fund, which permits net income tax to be deferred on monies set aside for future vessel construction, is questionable unless the movement is suitably defined as in the noncontiguous domestic trade. If the nodule carriage to land is defined as a foreign trade movement, then both foreign and United States flag ships may carry the nodules to American ports. The foreign built ships could have foreign crew and owners, and are estimated in this study to be much less expensive to build and operate than U.S. ships. American ships may be eligible to receive Construction Differential Subsidy (CDS) and Operating Dif- ferential Subsidy (ODS) , which are designed to equalize the costs of U.S. and foreign ships. However, the availability of such government subsidies for this service is not assured The subsidies must also be proven as essential to meet the foreign competition. Foreign built vessels may also be imported for registry under U.S. flag, and operated by American crew and owners. However neither CDS nor ODS can be provided for this situa- tion. Total costs would be intermediate in cost between the United States built and operated ships, and the foreign ships . As part of Phase I of a three-phased assessment of the potential environmental, social and economic impacts of manganese nodule processing activities, the numbers and types of nodule transport vessels needed were estimated, ignoring construction and location manning considera- tions. These studies are being conducted by the Department of Commerce's National Oceanic and Atmospheric Adminis- tration (NOAA) . During the course of Phase I, NOAA found that American environmental, social and economic effects could differ, depending on whether the nodule transport ships were U.S. built or not, and operated under United States flag or other flag. Each of the deep seabed mining consortia would reach primarily an economic decision as to location of shipbuilding or conversion, and flag of opera- tion. Therefore NOAA decided to perform this current study as an extension of recent work. The purpose of this report is to determine, in the absence of legislation requiring vessels to be American built and operated, or in the absence of provisions for subsidies, or other measures to encourage use of United States ships, the extent of cost differences in nodule transportation between United States built and operated, foreign built and American operated, and foreign built and operated vessels. METHOD OF APPROACH The method of approach chosen for this study was to secure specific construction and operating cost data for conven- tional foreign and American built ships, to identify the special features and operations needed on nodule transport ships and to estimate their costs, and then to estimate the operating and total costs for the vessels in typical nodule transport service. The manganese nodule is relatively dense, with a specific gravity of about 2.0 or less in the stowed condition. Ore carrier ship hold configurations are necessary for this density . Nodules were assumed to be raised from the sea floor with a hydraulic mining system and arrive at the surface as a mixture of nodules, nodule fragments, and seawater. Nodules may also be ground, either at the bottom or at the surface, to form a more easily pumpable slurry. Thus, nodules could be handled as a fine or coarse slurry, or dry of surface water as a mixture of whole nodules and nodule fragments. In this latter case, mining ship to transport ship handling would be accomplished by use of conveyors. Nodules may be ground and dried to reduce their weight by about thirty percent. Because of potential mining ship problems with drying significant quantities of nodules, with pneumatic handling of dried nodules, and the poor efficiency of fuel used for drying, industry probably would not dry nodules to powder form, unless transportation distances are very long. Therefore this dried nodule alternative was not analyzed in this study. All methods of handling nodules can be used on conventional standard ore carriers, bulk or ore ships, or ore, bulk or oil (0B0) combination ships. Recent vessel cost data, other published ship costs and cost indices were collected and combined with data in my private files. Additional sources of information were interviewed to obtain early 1977 data; sources included U.S. and foreign shipyards, the Maritime Administration, and operators of U.S. and foreign vessels. Data was sought for ships meeting the appropriate national classification society and govern- mental regulations, or international specifications for International Maritime Consultative Organization (IMCO) or Safety of Life at Sea (SOLAS) conferences. The ships in the data collected ranged in size from about 20,000 to 180,000 deadweight tonnage (DWT)*. The engineering characteristics of the ships were not well defined. However vessel type and equipment, speed, machinery and owner were always available. Combination ship dimensions were assumed as typical of recent designs, intermediate between the older, faster hulls and the extremely shallow-draft geometry. The American ship costs collected excluded United States subsidies, if any. Some data sources were public infor- mation, but many were private enterprises unwilling to permit publication of their cost information. Therefore proprietary data are not given, and the tables and graphs do not have a source indicated. *For this report, deadweight tonnage is in either metric or long tons that are interchangeable. Deadweight tonnage is the weight capacity of the ship for cargo, fuel, supplies and crew. For each type of ore-carrying vessel, the yard construction price of conventional ships without special nodule transport features was interpreted from the data for U. S. construc- tion, and for foreign construction in both the Orient and Northern Europe. Long-term prices based upon full costs, not currently depressed prices subsidized by governments to avoid unemployment, were sought but not secured. Both steam and diesel powered ship prices were included. Graphs were prepared showing the yard prices at then-current exchange rates, as a function of ship deadweight. Cost data points adjusted for inflation over time and exchange rate, from a variety of sources and for a variety of ship designs, were then used for a suitable range of ore-carrying ships. By this plotting procedure, small cost differences caused by ship specification variations are smoothed, and approximate cost ranges suitable for the purposes of this report are produced . The accuracy of the ship cost estimates is limited, because of variables of ship design and quality, number of ships ordered, differences in contract pricing, the fluctuation of exchange rates, and the escalation assumed to equate all yard prices to early 1977 contract dates. Further changes in relative prices can be expected prior to the time ships are ordered by the consortia for delivery in the mid 1980s. Variations of up to one or two million dollars, about five percent, can be expected for a specific ship costs, as compared to the parametric presentation of prices as a function of deadweight tonnage in this report. The standard ore carrier for port-to-port operation is not adequately equipped to transfer nodules at sea by any method, Equipments for slurry handling and dry conveyors were iden- tified as appropriate. Stowage, receipt, and discharge of the nodule material was evaluated to identify other vessel cargo handling requirements. Three ship designs for dry nodule handling and two for slurry pumping were developed, and handling equipment costs estimated roughly as compared to basic conventional ship costs. The standard features required in United States ships for pollution control, safety and health will be provided on American ships. Foreign vessels, especially inexpensive standard design carriers from Oriental shipyards, ordinarily would need additional measures to meet the American stan- dards of quality, and these increments were also indentified. A list of specific items needed to comply with high U.S. standards and not on many typical foreign ships was pre- pared, based on current knowledge of requirements. A price was estimated for the improvements, which estimates are not as accurate as the basic price estimates for conventional ships . 4 The total purchase price of the nodule transport ship includes the conventional ore-carrying vessel price plus nodule handling equipment, hotel accommodations, safety and pollution control features and quality improvement for a higher standard. The construction prices were converted to loan amortization including interest, depreciation to a salvage value, taxes at appropriate rates, and earnings of equity and working capital at needed levels for investment. The annual capital recovery rate was applied to the total improved ship cost to compute annual and daily cost allocations. This capital recovery rate corresponds to the cost to a consortia for a long term bareboat charter with a ship owner. An alternate, lower capital recovery rate that excludes earnings on equity was also computed, for application in the case where the consortia owns the ships and evaluates total return on equity invested in the entire mining, transportation, pro- cessing and disposal operations. Operating cost components include fuel, wages and benefits, stores and supplies, maintenance and repair, subsistence, insurance, reserves for claims, crew transportation, lube oil, overhead and administration. These quantities are also estimated for each vessel type and nationality. Fuel costs including lubricating oil were assumed at OPEC cartel prices for the appropriate grade and consumption rate. For all three flag situations, the costs for identical nodule transport services were estimated on a per voyage, per ton,* and annual basis. Typical transport voyages were simulated for ships of four sizes. Movements of slurry and raw nodules to representative United States Pacific coastal ports at San Pedro, California, and Astoria, Oregon were computed. Assumptions about probable cargo handling rates and ship turnaround time in port and at sea were identified. The magnitude of cost differences between U.S., foreign, and mixed ships is clearly measured. The extent of appropriate U.S. subsidy, if any, can be inferred from the cost dif- ferences . SUMMARY The next paragraphs briefly describe the analytical results of the study in the four areas of the report: Conventional ore-carrying ship building prices; equipment cost estimates for nodule transport ships; current operating costs; and simulations of nodule transport voyages and their costs. *tons (long) and tonnes (metric) are interchangeable in this report. Ore-carrying Ship Construction Prices : To illustrate the results of the parametric cost analysis, four ship sizes covering the full range of ship deadweight tonnage expected for nodule transport service were selected for computations and are reported here. The gearless standard ore carrier ship yard prices for United States, European and Oriental designs are summarized below. The American ships are steam powered, all others are diesel propelled. United States shipyards could deliver in three years, while the currently under-utilized foreign yards could deliver in two years. No adjustment in price is made for earlier delivery or later order at a higher price. TABLE 1-1 EARLY 1977 SHIPYARD PRICE ESTIMATES FOR ORE-CARRYING SHIPS (Million Dollars) Deadweight Tonnage (DWT) Flag/Type 40,000" 55,000 70,000 85,000 U.S. Standard/Bulk or Ore, Steam $38.0 $43.5 $48.0 $52.3 European Standard/Bulk or Ore, Diesel 21.3 25.0 28.3 31.3 Oriental-U . S . Standard/ Bulk or Ore, Diesel 15.4 18.6 21.5 24.0 Oriental- Standard/Bulk, Diesel 11.9 14.1 16.0 17.8 The Oriental shipyard prices are abnormally low, probably well below yard cost, because of the current low demand for new ships and governmental financial support to maintain employment in shipyards. This low price situation could change before nodule transport ships are ordered in the early 1980s, and therefore the European yard typical prices are used as the criterion of true foreign ship purchase costs which may be expected in the 1980s when demand for new ships has revived, delivery times may be more comparable, and governmental intervention is largely reduced. The capital costs of OBOs are much higher at large dead- weight than other ore-carrying ship designs. Because the flexibility to carry oil may not be used often by ships principally used to carry nodules, the extra cost is prob- ably unwarranted and therefore OBOs were not analyzed for operating costs in nodule service. Nodule T ransport Ship Equipment Cost Estimates : The nodule transport service will require special equipment for re- ceiving nodules, and accommodations for the crew of the mining ship carried as passengers. Also, upgrading of some standard ships to meet the higher quality standards of American owners, and to meet United States navigation, pollution control, safety and health requirements will increase the yard price. The standard features required in U.S. registered ships for pollution control, safety, and health are provided on all American and many European ships. Many higher quality standards for equipment, materials and construction of American-owned ships are economic choices, and commonly provided on many foreign ships to improve efficiency and reliability. European vessels ordinarily would need very few additional measures to meet the American quality stan- dards. Standard low cost ships from Oriental yards would need upgrading. Specific items needed both to comply with U.S. regulations and to raise standards, and not on typical cheap foreign ships were identified, and a price was esti- mated for the improvements. For the European ships, expen- ditures of $1.2 million for 40,000 DWT ship, to $2.2 million for the 85,000 DWT size, would meet all proposed and existing U. S. navigation regulations, provide full unmanned diesel engine room automation and systems checks, meet all air, water, oil, and cargo pollution control requirements, and provide first class crews 1 quarters. The costs for Orient- built ships to American and foreign standards are shown on Table 1-1. The standard ore carrier for port-to-port operation must be equipped to transfer nodules at sea. Costs of cranes for both loading and discharge, for slurry load and discharge systems, and for conveyors in United States yards are shown on Table 1-2. Foreign equipment costs average about two- thirds of the U.S. costs. However installation of slurry discharge pumps or self-unloading conveyor discharge ma- chinery was found to be expensive both to install and main- tain, and shore discharge machinery should be more desirable. Shipboard installations for receiving manganese nodules at sea from the mining ship were selected for conveyor and slurry cargo handling methods. The selected loading-only equipment costs are less than $1 to $3 million in the United States, and much less abroad. These on deck handling equipments are also quickly added to suitable conventional ore-carrying ships, and easy to maintain as compared to discharge machinery. Accommodations for 12 passengers were provided, to transport mining ship crewmen to and from shore. Two extra stewards are needed for these riders. The extra space and hotel ser- vices would add about $1 million to U.S. standard ship costs, but less for foreign-built ships. The total costs of the modified basic ore-carrying ships are shown on Table III-4. 7 TABLE 1-2 MANGANESE NODULES HANDLING EQUIPMENT COSTS ON SHIPS Estimated U. S. Cost (Million Dollars) Ship Size (DWT) Foreign EQUIPMENT Cost (% TYPE (Discharge Time) 40,000 55,000 70,000 85,000 USA Cost) II Dry Loading Conveyor $1.8 $2.2 $2.5 $2.8 65% III Dry Self- Unloader Con- veyor (24 hours nominal)* 5.2 6.5 7.6 8.3 70% IV Slurry Load Piping 0.90 1.07 1.22 1.36 55% V Slurry Dis- charge Pumps 4.0 4.8 5.5 6.1 75% (20 hours nominal) VI Revolving Cranes 3.6 4.3 5.4 5.4 60% (48 hours nominal) *Not suitable for installation in bulk ship configurations. All other equipment cost estimates apply to ore, bulk, or OBO ship configurations. American ship owners without subsidy need about 10.77% of yard cost for 25 years for capital recovery including 10% after tax profit, and 8.45% without profit. Europeans and Oriental owners need an average of 9.35% of yard cost per year for 20 years to earn a higher 20% after-tax profit, but payments are higher for the first eight to twelve years. Without profit (or taxes) , average capital recovery rates of 6.41% are needed. Imported ships would need a higher 11.7% of cost capital recovery rate with conventional financing to earn 10% after tax profits. Current Ship Operating Costs . Operating cost estimates included the components of: wages and benefits, subsis- tence, stores and supplies, maintenance and repair, insur- ance and reserves for claims, crew transportation, fuel and lube oil, overhead and administration. Detailed estimates of the number of crew were developed for steam and diesel power ships, with and without engine room automation, without gear or with crane and other cargo handling gear. No difference in crew size by nationality was notable in the base data. 8 Wages and benefit costs were estimated for American and six foreign country crews, including mixed European officers and Oriental crews. For the American and Norwegian crews, labor costs are a function of ship size and horsepower, called power tonnage. For the 70,000 DWT ship with a crew of 36, the relatively lower cost of foreign labor is shown here. Country Labor Cost Index U.S.A. 100% Norwegian 58% Italian 41% British & Spanish 34% Mixed foreign 25% Taiwanese 15% This great reduction in labor cost, an important cost com- ponent, is a major factor in the lower cost of foreign-flag ships. Subsistence (victualling) costs computed on a cost per man-day basis, are also lower for foreign crews. Stores and supplies, insurance and claims reserves, main- tenance and repair, and overhead and administration cost components were all found to lie within a reasonable range of costs at any particular deadweight. Graphs depicting the cost on conventional ore-carrying ships as a function of deadweight tonnage are provided in the detailed report. In addition, extra insurance would be needed for the pas- sengers and added stewards on the American ship. Insurance costs would also be increased for the added value of cargo handling gear onboard. M&R costs for the nodule handling equipment were added, at one to four percent of estimated installed equipment cost. For self-unloading and slurry discharge pumps, these costs become very expensive. Overhead costs depend in part upon the number of ships in fleet operated, but are not very important overall. Transportation to home of foreign crews was provided on an annual rotation. Port charges as a function of Gross Register Tonnage were estimated for U.S. Pacific coastal ports, and for ports up inland deep-draft river channels. Fuel costs were assumed at $12.66 per barrel for Bunker C and $13.20 for diesel, and $1.75 per gallon for lubricating oil, for the appropriate consumption rate as a function of propulsion plant power. In port consumption ranged from 10% to 30% of at sea rates, depending upon the cargo handling machinery. Typical American steam ships use cheaper Bunker C fuel at a higher consumption rate than diesel ships favored by other countries' operators. Including the cost of lubri- 9 TABLE 1-3 COMPARISON OF SHIP OPERATING COSTS Slurry Loading Ore Carrier, 70,000 DWT (1977 Dollars) Nation Built U.S.A. European European Nation Registered U.S.A. U.S.A. Italy Power Plant Steam Diesel Diesel Crew 35 31 31 ANNUAL COSTS (Thousands Dollars) Capital Recovery 5,422 3,677 2,964 Wages & Benefits 1,470 1,390 605 Subsistence 95 95 73 Stores & Supplies 199 199 111 Insurance & Reserves 666 593 417 Maintenance & Repair 514 514 352 Overhead & Adminis- 126 126 63 tration Transportation 25 Lubricating Oil 0_ 67 67 Total $8,492 $6,661 $4,677 DAILY COSTS (Dollars per day) Fuel at sea 8,100 6,473 6,473 Total at Sea 33,833 26,658 20,646 Total in Port 26,543 20,830 14,820 Profit, included above 3,524 2,267 2,831 10 eating oil, the diesel ships are less expensive to fuel and probably are equal to or lower than steam ships in other operating costs. American operators may switch from steam to diesel power for these reasons, if diesel machinery purchase and installation costs in U.S. shipyards are rea- sonable. Total daily costs for the United States, Italian-crewed European ships, and imported European-built ships of 70,000 DWT size for slurry unloading are shown on Table 1-3, to illustrate the typical cost estimate results. Total daily costs for Oriental ships were not calculated. Nodule Transport Voyage Simulations : The performance and costs of the nodule carrying ship, equipped to load by either slurry or by dry conveyor, and discharge by shore equipment, were computed. Slurry handling can be slightly faster than conventional handling, as in these examples, and about 4% less expensive than dry conveyor handling. Nodule slurry transfer times at sea ranged from 22 to 33 hours from the smallest to the largest ship, and port time was within this range. Dry nodule handling may take about four hours more per cargo transfer. Two different voyage lengths used were 1,750 and 3,800 nautical miles. These represent the typical minimum and maximum one-way trip to U.S. Pacific coastal ports from the Pacific Ocean areas of major commercial interest for manganese nodule mining, about 5° to 18° north, 110° to 180° west. Round trip voyage times were about nine days for the shorter to twenty days for the longer trip. Larger ships are slightly slower than smaller ships, and each ship is about 15% faster outbound in ballast. A deviation and current allowance of 10% of time was added to the great circle route. The Table 1-4 below summarizes the performance and costs for the service provided by one transport ship for slurry ships discharged by shore equipment. Although available for 350 days per annum, the ship may be used in nodule transport only for 330 days. Costs and performance of the mining ship nodule transfer and shore terminal discharge are expected to be the same for similar ships operated under any flag. Therefore these ship cost comparisons are expected to be valid except for small cost differences due to the choice of U.S. -built steamships versus foreign-built diesel ships. Conclusions The largest ship costs per ton are about three-fourths of the smallest ship costs, for any type of operation. 11 TABLE 1-4 NODULE SHIPMENT COST COMPARISONS (Slurry loading, shore discharge) Typical Draft, Feet Deadweight Tonnage 40,000 50,000 70,000 85,000 36.0 38.0 41.0 42.5 Voyage DOMES SITE B* TO SOUTHERN CALIFORNIA Ship trip p. a Thousand tons p. a 28.53 1,027 26.90 1, 331 25.41 1,601 24.85 1,901 Ship Costs ($ per ton) U.S. Built & Operated" $8.65 $7.51 $6.84 $6.45 European built, U.S. Operated 6.65 5.85 5.42 5.00 European built & operated 5.22 4.56 4.18 3.83 WESTERN BOUNDARY TO ANY WEST COAST PORT Ship trips p. a. 14.44 13.75 13.28 12.85 Thousand tons p. a. 520 681 837 983 Ship Costs ($ per ton) U.S. built & operated $17.23 European built, U.S. operated 13.20 European built & operated 10.39 $14.83 11.52 8.99 $13.21 10.44 8.07 $12.34 9.72 7.46 The European ship costs per ton are about sixty percent of U.S. ship costs, and the imported European ship net costs per ton are over three-fourths of the American ship costs. From the base of the same size foreign ship with minimum cost, the mixed-nationality ship costs about 29% more, and the American ship nearly two-thirds more than the foreign ship. Since the ships are carrying from one-half to nearly two million tons annually, depending on the route, the annual total cost differences range from $3.5 million for the smallest ships, to $4.8 million for the largest. The Oriental built and manned ships would be even less expensive to operate and purchase currently, and therefore would have even greater cost savings over American ships . *Site B, at 12° North 138° West, of the Deep Ocean Mining Environmental Study (DOMES) was selected as representative of commercial nodule mining areas and is the center of three sites being examined in a major research project to assess the environmental effects of at sea mining opera- tions . 12 Similar results for ore ships equipped for dry whole nodule transport are shown on Table 1-5. The unit transport costs are about 5% higher for dry conventional conveyor handling than for slurry handling, when both ships are discharged by shore equipment. The European costs relative to American ship costs are in the same proportion. Larger ships are more economic than smaller ships by the same cost reduction fraction. TABLE 1-5 NODULE SHIPMENT COST COMPARISONS (Dry Conveyor Loading, Conventional Shore Discharge) Deadweight Tonnage 40,000 55,000 70,000 85,000 Voyage DOMES SITE B TO SOUTHERN CALIFORNIA Ship trips p. a. Thousand ton p. a. 27.54 992 26.11 1,292 24.65 1,553 24.17 1,849 Ship Costs ($ per ton) U.S. built & operated European built & operated $9.05 5.45 $7.83 4.74 $7.17 4.35 $6.60 3.97 13 II SHIP CONSTRUCTION COSTS N o dule Charact e rist ic s Ships for carriage of manganese nodules must be designed to accept a dense commodity that utilizes only a portion of the available cargo stowage space. Nodules are reported to range in weight, as shown below, partially depending upon the amount of accompanying surface water. For ship transport, the water should be drained after loading to reduce trans- ported weight and to assure stable cargoes in seaways. TABLE II-l NODULE WEIGHT-VOLUME MEASURES Specific Gravity _ Density, Pounds/Ft - Density, Kilograms/M Stowage Factor , Ft-VLong Ton Stowage Factor, M /tonne Low 1.1 69 1. 10 33 0.92 Typical 1 90 1 25 45 45 72 High 2.0 125 2.0 28 0.50 The density of nodules is intermediate between iron ore and bauxite, viz: TABLE I 1-2 COMMODITY STOWAGE FACTORS Commodity Iron Ore Pellets Manganese Ore Chrome Ore Manganese Nodu les Bauxite Salt Phosphate Coal Raw Sugar Crude Petroleum Gasoline Wheat, Corn Dry Stowage Factor Range Cubic Meter Cubic feet per tonne per long 0. 29- -0.52 0. 32- -0.56 0. 37- -0.48 0. 50- - .70 0. 78- -0.97 0. 83 0. 89 1. 17- -1.33 1. 28 1. 08- -1.28 1. 34 1. 28- -1.67 ton (10. 3-18.8) (11.4-20.0) (13.2-17.2) (18-25) (28-35) (30.) (32.) (42-48) (46) (39-46) (48.2) (46-60) Source : W. J. Dorman, SNAME, 1966. 'Combination Bulk Carriers," 15 Ship Types The dense nodules may be carried in ore carrier hull types, which restrict the centerline cargo holds to a small part of the available hull space; or in bulk or ore ships which load dense ores in only some of the bulk cargo holds, leaving others empty. In either an ore ship or bulk-or-ore ship hull configuration, extra steel is needed to provide compart- mentation and adequate hull strength for concentrated loads of dense ore, although all have double bottoms. Combination ships are able to carry any ore, bulk, or oil (0B0) cargo. OBOs may also be utilized for nodule transport and are flexible for carriage and pumping of other liquid cargoes. Thus, all three ship types (ore, bulk/ore, and 0B0) will be considered in this analysis of ship construction prices. The basic bulk/ore or ore carrier has no cargo handling gear, although many ships are equipped with cranes and a few have self-unloading conveyors. Nodule Handling The nodules and fragments will probably be raised in a slurry from the ocean floor in an upward flow of sea water, by a hydraulic system, and nodules could also be transferred to and from ships as a slurry. Improved pumping efficiency will be achieved when smaller particles are produced by grinding nodules either at the sea bottom or on the mining ship. Because of the ease of handling and reduced chance of spillage of either coarse or fine particles, slurry handling on ships is considered most likely. The nodules as raised from the seabed may be transferred at sea from the mining ship to the nodule transport ship. Conventional dry bulk handling methods utilizing belt or screw conveyors and buckets may be satisfactory to handle the nodules as raised. However, reports indicate that nodules tend to disintegrate into small particles and dust when allowed to dry and when stacked in large piles and in ship holds. Nodules may also be dried at low temperatures to reduce weight by about 30%. However grinding and drying consumes much fuel, and produces hot, wet gases that probably cannot be used aboard ship. Also, dried nodules are dusty, and more difficult and slower in cargo handling. Therefore selection of transport of dried nodules is not considered likely by industry unless nodules are transported very much longer distances than the Pacific Ocean voyages analyzed in this report. Therefore dried nodules were not evaluated further in this analysis; only whole nodules conveying and slurry handling are examined. 16 Ship Characteristics The typical dimensions of combination ships (OBOs) and other ore-carrying ships suitable for nodule transport are shown on Figure II-A and Table II-3. A principal measure of the economic efficiency of a bulk- carrying ship is the operational capability of the ships to carry the largest deadweight possible within the limiting draft of the harbor navigation channels and ship terminal berth. Shallow draft design vessels are especially desired to maximize load capacity. A recent study by Rosenblatt (76) compared shallow draft bulk ship configurations to conventional ship designs as routinely reported by the U. S. Army, Corps of Engineers. This report and the NOAA Phase I report by Dames and Moore (77) are based upon an inter- mediate design configuration that is between conventional and shallow draft as shown in Figure II-B. The ship con- figuration selected as representative of recent combination ships. For example, at 40 ' (12.2 meter) salt water draft, the ship deadweights are: Corps of Engineers-Conventional 50,000 DWT NOAA Phase I-Dames & Moore 67,000 DWT Rosenblatt-Shallow Draft 88,000 DWT This illustrates the wide range of variation (plus or minus one-quarter of DWT) of ship designs. Costs are also subject to wide variations because of design variations. Most American ports have 40' (12.2 m) nominal channel depth at low water in salt water. Although a small space for ship bottom clearance is needed, ship entry at mid-tidal level or high water is frequently scheduled for shorter channel lengths to secure greater water depths when transiting, and berths can be dredged deeper than the channel. Therefore loaded drafts equal to nominal depth can be accommodated. Because of the short typical voyages to transport manganese nodules to port, the transport ships will spend much time in port and in ballast when higher speeds are secured. The speed and power of most recently-designed bulk ships have been reduced to save fuel and cost of the power plant and maintenance. Formerly most bulk ships and tankers achieved speeds when laden of 15 to 16 knots. Figure II-C depicts the approximate power requirements for various laden speeds, as a function of ship size, and for the typical ships assumed for this cost analysis. 17 Figure II-A TYPICAL COMBINATION SHIP-PRINCIPAL DIMENSIONS VERSUS DEADWEIGHT TONNAGE 1000 900 800 700 600 500 400 300 9> Z o CO z lli 200 100 90 80 70 60 50 40 30 20 10 LENGTH (B.P. BEAM DEPTH DRAFT 300 200 100 50 30 20 10 CO LJJ lil 10 20 30 40 DEADWEIGHT TONNAGE (thousands) 18 50 60 70 80 90100 SOURCE: Author. 00 I w ►H" m < En CO o H CO !2 H Q Pm H CO O H E-* < H CQ S o u * E-" P • CD 5 CD • UH CO — -P MH ,—, 03 CO P p Q CD ■P cd e ■P d) CD IH XI ^ +J Cu CD ~ Q CO P CD •P CD P CD CD 4-1 CD PQ CO P CD +J CD £ ^^ • +J Cu CD • CD CQ m — X -p C W CD P ^ CD -P CD B Eh Q o ■P Cn C O LnOLDOOLDOOLO hOnvDOOCTiHCNn ^(NfNovDOmcorn CD Ol O H r- I CM CN CN P~> LDLDOLnoooLDLn VOrH00iHLD00rHrOr~- • •••••■■« rHCN^rLD \o rHrHrHi— IrHrHrHrHCM r^ooor^^OrHooo ^r^-OOCTiOrHCNrorO TCNOO^r-VDCTiVDH CNfNCMCMnrororO'^r OLOOlDOOOLDO CDnH^)HCN^^DH f^cooHfNrMn^r HHHCN!NCNCN(NCM ooooooooo ooooooooo ooooooooo LOOOOOOOOO HMfi^in^r^cxjo en CD P O 2 CD 3 ip P MH CD >1 fl P •H ■H rH O p (TJ CD CU P fO rd U £ P CD X X 0^ -P •H CD P 5 03 H >i • rd rH CT> -P CD C -P •H p 03 P 03 CD •H rH X X a -P p rH H. a CD W Cu CD c to P — cn -p en CD u p T5 •H rd •H P rH cn P 3 c CD •H e -H T3 cn p C £ CD 0^ •H tn P cn c • CD c a. CD rH C7 e u £ •H c 03 CD T3 •H u CD 5 T3 CD T5 P CD C7> C CD 13 rd to X rH c a £ J e CD P p P CT^ CD U e P P p CD CD 03 X *k i— i J- 1 cn w 03 X •H CD 1 £ P CD •H a 5 rH • P CD T3 acu rH a d a • '13 CD ^ CQ CO T3 Q CO c X II 03 II P cn • £ Eh C S 03 12 CD • CD Q rJ CO CQ 19 Figure II-B COMPARISON OF DEADWEIGHT-DRAFT RELATIONSHIPS 500 400 300 200 C cs Q Z < 00 D O X I- 200 100 AMERICAN NORWEGIAN ITALIAN BRITISH AND SPANISH MIXED FOREIGN TAIWAN POWER-TONNAGE (HP plus DWT) 125,000 100,000 70,000 40,000 100,000 70,000 40,000 10 20 CREW SIZE (number of men) 30 48 40 50 60 70 80 90 100 SOURCE: Author. TABLE IV- 4 SUBSISTENCE COSTS National i ty Subsistence Cost (Dollars per man-day) American Norwegian Italian & Oriental British $ 5.50 4.50 4.00 3.50 These costs assume Pacific Coast location of purchase of all foods at the port of call, which tends to decrease the spread in victualling costs. Stores, Supplies and Equipment Materials needed for daily operation of the vessel and crew often border on maintenance and subsistence categories, and result in some inconsistencies in the amounts reported. Figure IV-B illustrates the range of stores and supplier costs reported for both American and foreign bulk ships. The foreign ship cost data was for ships not equipped with cargo handling gear, while some of the American data in- cluded minimal equipment on board. The high side of the foreign range will be utilized for this cost analysis since all materials must be delivered to the ship at a U. S. Pacific Coast port, additional equipment will be installed, and operated to high standards. The best estimate line on Figure IV-B will be assumed for American-flag ships. The additional stores and supplies expenses for nodule handling equipment are estimated at $5,000 to $10,000 an- nually for the smallest to the largest ships. This expense also increases for large crews and for regular carriage of the mining ship crew, and is estimated to cost $6,500 for all U.S. ships and 80% of that for all foreign ships. I nsurance and Reserves The values on Figure IV-C reflect estimates of total 1977 premiums for Hull and Machinery, Protection and Indemnity, War Risk, Second Seamans, and Shipowners Legal Liability (for deviations) insurances for standard American and foreign gearless ships. Also included in the costs are reserves for claims under the deductibles under the various coverages. Cargo interests' insurance is not. included, nor is loss of earnings insurance for the ship owner. The costs illustrated by a line actually fall in a wide band, with differences in insurance premiums and deductibles largely 49 Figure IV-B TOTAL ANNUAL STORES AND SUPPLIES COST 500 400 300 200 100 90 80 70 60 50 40 30 CO a. < 20 O Q ■jM ••>*"> AMERICAN ;-s---i**""" im" FOREIGN BEST ESTIMATE O CO O z < CO D O z 10 MM 10 20 30 40 DEADWEIGHT TONNAGE (thousands) 5 50 60 70 80 90 100 SOURCE: Author. established by the ship operator's loss experience. Unless the government rules are revised, tanker pollution liability insurance should not be required for nodule trans- port ships carrying small amounts of fuel (less than 2000 tonnes) to the mining ship. In general, this category for insurance of American ships is at least 50% more expensive than foreign insurance costs, principally because of the number and amount of claims of stevedores and seamen, the larger crew size, and the higher ship value. For the additional passengers and crew, the U. S. cost was increased by only $11,000. The American transport ship cost for a safe, high quality operator with a fleet of many ships and a good loss record may be roughly estimated by a formula where: Total Insurance Cost=$151, 000+$4. 50 (DWT) +0. 4% (ship cost) Insurance costs tend to decrease as the value of the vessel decreases, to some extent offsetting the increase in main- tenance and repair costs as the ships become older. Maintenance and Repair The estimated total costs for all maintenance and repair (M&R) not performed by the ship's crew are shown in Figure IV-D. Because of the wide variation in ship age, actual annual costs range from one-half of the value shown for new ships, to one-half again more for ships 25 years old. However the amounts shown, if set aside into a reserve for future M&R, should be adequate if interest is earned to keep up with inflation. The U.S. ships would be serviced in U.S. yards, while the foreign ships used in nodule transport service may choose to drydock in Canada or elsewhere to keep M&R low. However pariis availability problems and lack of experience of skilled repairmen working on foreign machinery, may both tend to increase the foreign ship costs to the relatively high levels shown on the graph. Maintenance and repair cost increases due to additional equipment installed on foreign ships are expected to be balanced by the cost decreases resulting from higher quality construction, such as the improved hull and hold coatings, use of better materials in the accommodations, the more easily-cleaned holds, improved machinery, and automation. 51 1000 900 800 700 600 500 400 300 200 cc < O Q U. O CO Q Z < CO O H 100 10 Figure IV-C TOTAL ANNUAL INSURANCE AND RESERVES COSTS T\ AMERICAN FOREIGN 20 30 DEADWEIGHT TONNAGE (thousands) 40 50 60 70 80 90 100 SOURCE: Author. 52 Additional M&R of the enlarged accommodations is estimated at 2% of the increased cost, foreign or domestic. The M&R cost for the cargo handling equipment is assumed at an annual percentage of the installed cost for each ship type, foreign or domestic, as reported here: Ship Type Handling Equipment M&R Annually IV Slurry, Load 1% II Conveyors, Load 2% III SelfUnloader 3% VI Cranes 3% V Slurry Discharge 4% The last three cargo handling systems add substantial M&R costs, $100 to $300 thousand dollars annually to the American ship costs, an increase of almost 40% to half of the basic gearless ship M&R cost. The M&R for cargo handling category does include overhead- type costs associated with operating the cargo handling equipment, such as communi- cations . Overhead and Administration : Management costs are largely a function of the number of ships operated. The values estimated in Figure IV-E assume three nodule ships of a ten ship fleet under a United States company's control, and three nodule ships of a 30 ship fleet under foreign control. Also, the ships are assumed to be on long-term charter or management contract for nodule transportation, not in the spot market. This cost category includes miscellaneous expenses not included in other categories. The carriage of mining ship crewmen, installa- tion of additional equipment, and a high standard of design are expected to increase the costs of neither ship manage- ment nor of nodule transportation. Transportation Movement of crews to and from their home amd the transport ship will be a continuing expense. Crew rotation may be every six months at first class airfare for men working on American ships, to annual rotation of the entire crew of a foreign ship on a group air tour at the lowest cost. For the manganese nodule operation with an American ship crew signing on at the nodule discharge port, no expense should be involved. For foreign ships, about $800 per crew berth annually should be adequate for most countries. Since the total crew transportation amount is usually less than $30,000 per annum, closer estimates are not necessary. 53 Figure IV-D TOTAL ANNUAL MAINTENANCE AND REPAIR COSTS 1000 900 800 700 600 500 400 CO < o Q u. O CO Q Z < CO D O I 300 200 100 AMERICAN OBO's AMERICAN Bulk or Ore FOREIGN Bulk or Ore 10 20 DEADWEIGHT TONNAGE (thousands) 30 40 50 60 70 80 90 100 SOURCE: Author. 54 Fuel and Lubricating Oil Underway consumption rates for fuel oils and lubricating oil by steam plants and by diesel engines at full power are shown in Figure IV-F. Steamship lube oil consumption is very small compared to diesel ship lube consumption, and is aggregated with boiler and generator fuel requirements for fuel oil. Steamships burn Bunker C costing only $12.66 per barrel, delivered. Fuel oil is 1500 sec. Redwood heavy diesel for diesel ships at $13.20 per bbl, the current OPEC price. Diesel lubricating oil is assumed at $1.75 per gallon or $73.50 per barrel, the U. S. Southern Pacific Coast port cost currently. Both U.S. and foreign ships pay the same unit fuel cost. However most American ships are steam powered, and foreign ships are diesel powered because of the net fuel saving from a 20% lower consumption rate but a 5% higher diesel fuel cost. In-port fuel oil consumption rates for power generation are 10% of underway consumption for gearless ships, but 30% for tankers and OBOs pumping oil cargo in port. Therefore for ships equipped with self-unloaders , slurry discharge pumps and cranes (types III, V and VI) , in-port fuel oil consump- tion was assumed at 30% of underway rates. Port Charges Port charges levied against nodule transport ships in the U. S. Pacific Coastal ports include dockage, pilotage, tug hire, line handling, watchmen, customs, launch hire and similar items. The size of the vessel determines many of these charges, each of which is quite small. Previous analyses have indicated that Gross Register Tonnage (GRT) , a measure of the total internal volume of a ship hull, is a suitable parameter for estimating port charges. For most bulk ships, except ore-only designs, the Gross Register Tonnage is about 60% of deadweight tonnage for ships of 40 to 100 thousand DWT . The base charges for a one-day call include port entry and departure; additional days expenses are at a lower daily rate. The Table IV- 5 below summarizes the base cost for a bulk-ore ship port call at either ocean port or up an inland navigable channel to a deep water terminal; both situations apply on the Pacific Coast. The additional daily cost does not depend upon channel lengths to port. 55 Figure IV-E TOTAL ANNUAL OVERHEAD AND ADMINISTRATION COSTS 500 400 300 < o Q 200 100 90 80 70 60 50 40 30 20 O c/» Q Z < CO D O H 10 AMERICAN FOREIGN 10 20 30 DEADWEIGHT TONNAGE (thousands) 40 50 60 70 80 90 100 SOURCE: Author. 56 Figure IV-F FUEL AND LUBRICATION OIL CONSUMPTION RATES 10,000 9000 8000 7000 6000 5000 4000 3000 2000 — 318 1000 900 800 700 600 K 500 £ 400 Q. cc o > < Q CC LU a. CO _J UJ CC CC < CO 300 200 100 1272 954 636 159 127 95 64 oc < LU > CC LU Q. CC o < D CC HI a. CO CC 111 1- LU o CD D o LUBRICATION OIL (DIESEL) Barrels per Year 32 F Barrels UELOIL i s per Day ( Steam (Bunker C) — Diesel (1500 second Redwood) 1 HORSEPOWER (thousands) 5 6 7 8 910 20 30 40 50 60 70 8090100 SOURCE: Author. 57 TABLE IV- 5 PORT CHARGES (Dollars) Deadweight Tonnage 40,000 55,000 70,000 85,000 Inland Port, up Channel, $6,600 $8,550 $10,350 $12,200 First Day Ocean Port, First Day 4,300 5,300 6,400 7,500 Additional Daily Cost 1,100 1,470 1,830 2,190 The total operating costs for any vessel are estimatable from specifications of the precise voyages to be undertaken. The parameters for operating cost described here are applied to typical nodule transport voyages in the next Section V, where voyage proforma's are estimated. 58 V VOYAGE SIMULATIONS The performance and costs of the selected ships were esti- mated for nodule transport service in the Pacific Ocean. This section describes the typical ship routes, possible cargo handling systems, the ship schedules, and then the costs are summarized. The costs of different vessel flags are compared for the U. S. built and operated ships, foreign built and operated ships, and the mixed flag, foreign-built and U. S. operated ships. The previous sections of this report described many of the assumptions and cost estimating procedures that are not re- peated here. Routes and Ports The principal region of interest for deep sea mining by the consortia is a band from 5° to 18° North latitude, and from 110° to 180° West longitude, in the Pacific Ocean south of Baja, California and Hawaii to the International Date Line. The Deep Ocean Mining Environmental Survey (DOMES) is a major research project of NOAA at three sites near the center of this band, and the middle site is designated "B". In the NOAA Phase I reports (Dames and Moore, 1977) the mining sites were assumed to be at DOMES Site B and the middle of the western boundary of the geographic area of principal commercial interest as specified in Table IV-I. Also, the ports of San Pedro, California, and Astoria, Oregon, were selected as representative of Southern and Northern U.S. Pacific coastal areas. These same locations are assumed in this analysis for evaluation of typical ship voyage costs. Table V-l lists the locations, distances, and the ship round-trip voyage times. These were computed for the shortest (great circle) courses, at typical speeds laden and 15% faster when in ballast at 40% of DWT, and normal continuous power for ships with ram bows. Allowance of 10% of the voyage times reported in Table V-l was provided in the ship schedules to account for voyage route deviations, currents and delays. This minimal addi- tion should be adequate for such a repetitive service in a relatively placid sea. The slower speed typical of larger bulk ships would be subject to analysis by operators to ascertain the desira- bility of faster large ships with higher powers, especially for the longer voyages to more westerly mining sites. 59 From TABLE V-l SELECTED NODULE TRANSPORT VOYAGES + Distance Round Trip Voyage Time* (nautical (days) at loaded speed To miles) (knots) 15. 5K 14. 9K 14. 5K 14. IK DOMES Site (11°42'N, 138°24'W) B Southern 1,750 California 8.752 9.105 9.356 9.621 DOMES Site B Pacific Northwest 2,275 11.378 11.836 12.163 12.508 Western Boundary (12°N,180°W) + Any West Coast Port 3,800 19.005 19.770 20.315 20.892 No extra sailing distance is provided here; in computations 10% extra time is allowed for routing and currents. Ballast speed taken at tinuous power with ram speeds are for the 40, ships. 115% of loaded speed at normal con- bow and 40% ballast. These vessel 55, 70, and 85 thousand DWT typical Port and Ship Cargo Transfer Facilities Two systems for handling nodules are examined for vessel costs, by conveyors and by slurry pumping. The analysis reported in Section III confirmed industry opinion that installing multiple shipboard nodule discharging equipment is relatively expensive, because two or more ships must be equipped with discharge gear that is also more difficult to maintain onboard than onshore. Therefore provisions have been assumed for either a nodule loading distribution con- veyor, or a slurry receiving pipeline and dewatering, on a bulk-ore ship. For either method of loading, either method of discharge may be adopted, since the discharge equipment on shore is independent of the loading system. The higher cost OBO ship and more expensive self-discharging slurry or conveyor ships are not analyzed. The effective transfer rates in long or metric tons per hour are shown on Table V-2. Effective slurry load or discharge rates are assumed to be 70% of the nominal rated capacity, and conveyor methods are expected to average 60% efficient. Equipment on the mining ship is assumed to be installed with 60 TABLE V-Z ESTIMATED NODULE HANDLING RATES AND TOTAL PORT TIME Ship Deadweight (DWT) Handling Method Load, Whole Nodule Conveyor Load, Slurry Pumping Discharge, Shore Excavator 40,000 55,0 00 70,000 85,000 Average Transfer Rates (Long tons/hour) 1,600 1,800 2,000 -2,200 2,000 2,200 2,400 2,600 1,500 1,800 2,100 2,400 Discharge, Shore Slurry Pumps 1,750 2,100 2,450 2,800 Total Transfer Time at Sea (hours) Load, Whole Nodule 26.5 31.5 35.5 38.77 Load, Slurry Pumping by Mining Ship 22.0 26.5 30.25 33.42 Total Port Time (Hours) Discharge, Shore Excavator 30.0 31.5 34.0 34.87 Discharge, Shore Slurry Pumps 24.57 27.57 29.71 31.32 61 rated capacity of about 2,700 tons per hour for loading of the smallest (40,000 DWT) ship, up to about 3,700 tons per hour for the largest (85,000 DWT). The mining ship stowage capacity for transfer, mining rates, and transfer rate are interrelated but were not analyzed in this study. For discharge of dry, whole nodules, shore cranes rated at 1,000 tons per hour per unit with clamshell buckets, con- tinuous bucket unloaders, or Hulett cranes, were assumed to be provided at one unit per each two ship laden holds. Shore based slurry pumping equipment handled by a crane was assumed for each of the laden holds, with each slurry dis- charge unit rated at 500 tons of solids per hour. Because of the overall performance efficiency noted above, the slurry system is slightly faster than conveying. Total time at sea for loading may take about four hours longer than actual nodule transfer time, because of the approach, connect and disconnect time. Total port time would probably be about six hours longer than computed nodule discharge time. Fueling and repairs should be com- pleted in the time available without extensions. The total sea transfer and port times are shown on Table V-2, for ships carrying 90% of their rated deadweight tonnage in nodule cargoes on the average voyage. Total nonsteaming times per round voyage range from 56.5 to 73.6 hours per trip for conveying methods, and almost ten hours less with slurry pumping. Schedules and Performance The sum of underway voyage times, laden and in ballast, and the transfer time from the mining ship at sea and in port, determine the total round voyage time. The transport ship can be fully utilized less than normally available because the mining ship will have time when it is not producing nodules. Therefore a useful transport ship year of 330 days was assumed, which would result in the number of voyages shown on Table V-3 for both slurry and conveyor handling methods. Under the assumptions made, little additional annual capacity (less than 4%) is provided by slurry methods of handling, as compared to conventional dry bulk conveying. Ship cost when equipped for dry nodule loading by conveyors is a bit over one million dollars higher for conveyors than loading by slurry pipeline on American ships. Additional conveyor loading maintenance and repair and manpower costs slightly increase the conveyor cost difference over slurry loading. However these differences are less than 3% of the total yard costs. 62 TABLE V-3 NODULE TRANSPORT SHIP SERVICE* Deadweight Tonnage (Thou s ands) 40 5_5 70 85_ SL URRY HANDLING Site B-Southern California Trips p. a. 28.53 26.90 25.41 24.85 Tons p. a. (thousands) 1,027 1,331 1,601 1,901 Site B-Pacific Northwest Trips p. a. 22.83 21.61 20.78 20.95 Tons p. a. (thousands) 822 1,070 1,309 1,534 Western Boundary-Either Trips p. a. 14.44 13.75 13.28 12.85 Tons p^.a (thoudands) 520 681 837 983 CONVEYOR HANDLING Site B-Southern California Trips p. a. 27.54 26.11 24.65 24.17 Tons p. a. (thousands) 992 1,292 1,553 1,849 Site B-Pacific Northwest Trips p. a. 22,19 21.09 20.28 19.61 Trips p. a. (thousands) 799 1,044 1,277 1,500 We stern Boundary-Either Trips p. a. 14.19 13.54 13.07 12.67 Tons p. a. (thousands) 511 670 824 969 *Assumes 330 working days annually, and 90% of deadweight tonnage represents the average nodule load. 63 Therefore both the slurry system and dry nodule conveyor methods with shore discharging were selected to demonstrate the relative transportation costs of nodule ships. Slurry is described first, and the raw nodule conveyor and shore conventional discharge are reported last. The other systems would be more expensive; however this cost comparison does not include terminal equipment, land, storage and labor costs, nor mining ship costs for the same items. A systems analysis examining these elements probably will be performed for each mining consortium. Reports of analysis performed by the mining consortia indicate the slurry system described here is favored for implementation. However the conventional dry conveying and unloading cost results are shown at the end of this section. Slurry Transport Ship Daily Costs The daily charge for recovery of capital cost, allocation of annual operating expenses including maintenance and repairs of added equipment, and fuel costs, were computed from data fully presented in the preceding sections. The summary re- sults are shown on Table V-4 for all four selected ship sizes equipped to load slurry at sea, for U. S. construction and operation; foreign construction and operation, and foreign- built for U. S. operation. The American-built ships are TABLE V-4 SLURRY NODULE TRANSPORT SHIP DAILY COSTS SLURRY LOADERS, AUTOMATED, 330 OPERATING DAYS (Dollars per Working Day) Deadweight Tonnage (Thousands) 40 55 70 85 United States Built & Operated; Steam : At Sea $27,383 $20,879 $33,833 $37,098 In Port 21,344 24,156 26,543 29,344 Profit Included 2,801 3,201 3,524 3,910 European Built, U.S. Operated; Diesel : At Sea 20,932 23,915 26,658 29,168 In Port 16,117 18,565 20,830 22,867 Profit Included 1,695 2,002 2,267 2,503 European Built & Operated; Diesel : At Sea 16,502 18,715 20,646 22,425 In Port 11,687 13,365 1.4,820 16,124 Profit Included 2,116 2,500 2,831 3,126 64 steam boiler and turbine powered, the others are diesel pro- pelled and have a four man smaller crew at the same size and power. Total annual costs incurred over a 350 day manning period are to be recouped in 330 days of operation, indi- cating 20 days in active idle status. The costs estimated for mixed ships imported into the United States requires some significant assumptions. These include the diesel propulsion M & R costs, the reduced manning on the diesel ship without increase in pay over comparably- manned steamships, and no application of duties for the importation of a commercial ship. However the other costs of a mixed ship are reasonably estimatable. The Table V-5 below indicates the distribution of total daily costs for 70,000 DWT slurry loading nodule transport ships underway, under the three flag conditions. A rela- tively high proportion is for capital recovery, about half the total for U.S. built ships. The foreign vessels 1 rela- tively high fuel expenditure explains the constant attention by foreign operators to improved engine efficiency. The imported ship has a notably high proportion of costs for wages and benefits. TABLE V-5 DISTRIBUTION OF UNDERWAY DAILY COST ELEMENTS 70,000 DWT, Slurry Loading Nodule Transporters (Percentage of Total Daily Underway Costs) U. S. Ship Imported Ship Foreign Ship Component 40% 43% 25 31 16 9 7 6 6 5 6 6 129% 100% However the 29% increase over the cheapest foreign ship in total daily underway cost for the imported ship, and the 64% increase for the U. S. ship, indicate a substantial margin of saving for the cheapest ship of two to five million dollars per year for the same transport capacity. The cost differences should extend for twenty years unless aggravated by even higher ship and fuel prices and wage differentials. 65 Capital Recovery 49% Fuel 24 Wages & Benefits 13 Insurance 6 Maintenance & Repair 4 All Other 4 Relative Total Costs 164% 30 25 20 15 10 9 8 7 DC w CO QC < O O Figure V-A NODULE SLURRY TRANSPORT COSTS: 1977 WESTERN BOUNDARY TO EITHER PORT DOMES SITE B TO SOUTHERN CALIFORNIA Imported Imported 10 20 30 DEADWEIGHT TONNAGE (thousands) 40 50 60 70 80 90 100 SOURCE: Author. 66 Slurry Transport Cost Comparisons Figure V-A, or Table 1-3 in the Summary, show the costs per metric or long ton of nodules computed for the DOMES Site B to San Pedro slurry movement, and for nodule transport from the Western Boundary to either San Pedro or Astoria. The smallest size ships were about 35% more expensive per ton than the largest size calculated, for every flag and distance This result demonstrates again the economy of ship scale and cause of the insistent commercial demand for deeper naviga- tion channels to marine terminals. However the extra costs of deeper channels and terminals, and of faster, larger terminals for larger ships, is not reflected in these costs. Clearly operators will choose to use fewer, larger ships when possible. The foreign ship cost per ton, $8.07 in 70,000 DWT ships, is about 64% less than the U. S. ship costs at $13.21. The imported ship cost is 21% less than the American ship cost. The inverse computation results in foreign ships being 59% of U. S. cost, and for imported ships, 77% of U. S. ship cost. Total costs of a 70,000 DWT ship per year are: for foreign ships $6,755,000, for imported ships 8,738,000, and for American ships 11,057,000. The total differences of over $4.25 million per year, for ships with similar capacity in similar services are too large an amount to be negligible. Conventional Handling System Costs The costs estimated for daily operation of the bulk/ore ships equipped for conveyor loading at sea and shore dis- charge by conventional shoreside bucket equipment are shown on Table V-6. These daily costs are only a few hundreds of dollars per day more, because the ships are over 2% more expensive and carry one additional crewman as compared to the slurry loading ship described above. The distribution of daily cost elements is 5 same as for slurry nodule ships. The cost results for DOMES Site B voyage to Southern Cali- fornia parallel those of the slurry method costs, but are 40C per tonne more for the smaller U.S. ships, to 15C per tonne more expensive for the largest, roughly 4-1/2% more expensive. The European ship example (Italian crew) is about 4% more expensive for dry conveying compared to slurry handling. 67 Again, the smallest ship costs one-third more per tonne than the largest, just as for slurry. Also, the European built and operated ship costs are only 60% of the U.S. built and operated ship costs. Conversely, the U.S. ship costs two-thirds more than the foreign. These average values are almost exactly the same as reported for the slurry handling ships, and demonstrate the consistency of result that is expected of this type of computation from parametric data. Similar cases can be computed for other voyages, handling methods, or nationalities of crew operation. However the same comparative results will be generated, and therefore more cost computations need not be reported. Even changing the major underlying voyage assumptions which apply to both U.S. flag and foreign ships will not materially alter the conclusions about relative costs. TABLE V~6 DRY WHOLE NODULE SHIPMENT COST COMPARISON (Conveyor loading, shore discharge) Ship Deadweight Tonnage 40,000 55,000 70,000 85,000 (Dollars per wet tonne) Site B to Southern California U.S. Built and Operated, $9,046 $7,832 $7,174 $6,596 Steam European Built and Operated, Diesel 5.445 4.742 4.347 3.965 Daily Operating Costs (Dollars per Day) U.S.-Steam-At Sea 27,813 31,452 34,639 37,898 -In Port 22,310 25,103 27,754 30,580 -Includes Profit 2,864 3,278 3,615 4,008 European- Diesel -At Sea 16,805 19,801 21,034 22,849 -In Port 12,258 14,028 15,532 16,898 -Includes Profit 2,179 2,572 2,911 3,215 68 VI REFERENCES H. J. Adams "Bulk Carrier Design,'" Royal Institution of Naval Architects, February 22, 1963 B. V. Andrews "Feasibility of U. S. Flag Heavy Lift Shipping," Lykes Bros. Steamship Co. and Maritime Administration, January 1977 H. Benford "Ocean Ore Carrier Economics and Preliminary Design," Trans. Society of Naval Architects and Marine Engineers, 1958. H. 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