The salvage of a bulker that grounded off the Solomon Islands has turned into a wreck removal after Hong Kong shipowner King Trader declared the stricken panamax a constructive total loss.
However, the hull, after grounding at a Unesco World Heritage site, will end up being just a fraction of the total claims bill, as the 73,600-dwt Solomon Trader (built 1994) was valued at scrap levels, currently around $3.8m.
Insurance sources said it is likely the hull cover was placed in the Far East.
The hull loss claim will probably be dwarfed by wreck removal and oil pollution containment costs that are expected to run into tens of millions of dollars. These claims are likely to fall largely on the shipowner’s third-party liability cover, provided by Korea P&I Club, which issued the vessel’s blue card, and its reinsurers.
Korea P&I places much of its reinsurance cover through insurance broker Marsh in the Lloyd’s of London and London corporate markets. The full extent to which the London market will be exposed is unclear at the moment.
The disaster will add to the list of high-value claims in the London marine market, which suffered its largest hull loss ever when a mega-yacht newbuilding was destroyed by a fire at Germany’s Lurssen shipyard last September, costing underwriters around $700m.
The Solomon Trader grounded off Rennell Island on 5 February after being caught in a cyclone while loading a bauxite cargo bound for China.
As TradeWinds reported previously, Korea P&I has appointed Florida-based Resolve Marine to salvage the vessel.
Wreck removal plan
It is understood a wreck removal plan is being drawn up, with salvors hoping they can lighter the ship of 600 tonnes of bunkers and 11,000 tonnes of bauxite onboard to carry out a refloating.
Reports suggest the spill, which has so far amounted to an estimated 75 tonnes of bunker fuel, is being contained.
However, gaining access to the vessel in shallow water in an environmentally sensitive area will add to the difficulty of the wreck removal.
Experts suggest that strict liability is likely to apply, meaning the shipowner’s insurers will have to pay out without fault being determined first. Under the International Convention on Civil Liability for Bunker Pollution Damage, the owner’s liability for a vessel of this size will be capped at around $33m for pollution costs.
The shipowner may also be able to limit its liability for the wreck removal operation under the Nairobi International Convention on the Removal of Wrecks.
