viewSulNOx Group Plc

Shipping is a dirty business and SulNOx wants to clean it up

One stacked container ship, for example, can produce as much pollution as 50mn cars

SulNOX Group Plc -
Transporting containers is one of the world's major pollutants

Shipping is one of the largest elephants in the room in the pollution debate.

One stacked container ship, for example, can produce as much pollution as 50mn cars – yes it’s a staggering number and cruise liners are apparently little better.

A company that has just floated on the NEX exchange, however, wants to do something about it.

SulNOx Group Plc (LON:SONX)  has devised a formula that emulsifies diesel and heavy fuel oil so it burns more efficiently, making it cheaper and less polluting.

For diesel users, emulsification is a complex and costly problem.

In diesel that is stored, free water is always present and this splits from the oil and drops to the bottom.

It’s the same principle as a salad dressing in the fridge that has to be shaken up to re-combine the mixture.

In diesel, however, especially when it is stored for lengthy periods, microbial organisms grow in this water, feeding on the diesel and turning it to unusable sludge.

Easing a major headache

For businesses running huge lorry fleets or diesel generators that need to have large amounts of fuel in storage it is a major headache.

SulNOx has devised a way for that splitting not to happen – effectively meaning that diesel can be stored for long periods if not indefinitely.

By adding a tiny quantity of the SulNOx product direct to the diesel, the free water is encapsulated and engine combustion is improved.

A mining giant has held talks, while one sizeable UK oil distributor is said to be close to finishing its evaluation.

A conditioner is one of two applications currently developed.

The second is an HFO emulsifying agent to be combined with water and added to an engine.

Engine additive

It’s being targeted initially at shipping companies where the product and water mix with the HFO using a simple on-board dosing system.

As well as saving on fuel costs, this also reduces the production of pollutants such as Nitrogen Oxide, Sulphur Dioxide, CO2 and harmful particulates.

Exhaust fumes are just unburnt fuel explains Nicholas Nelson, SulNOx’s chief executive.

Adding water and an emulsifying treatment to the mix makes the engine burn more of this unused fuel as a greater amount of the oil particles interact with oxygen.

In tests using a combination of SulNOx’s emulsifier and water some 6% less fuel was consumed

All round, Nelson says that using SulNOx’s formula will reduce toxic emissions by 30% on average while fine particulates – suspected to be a major cause of asthma - are reduced by up to 60%.

“We make the explosion better, which improves the burn, so the bad things disappear.”

Fuel usage reduced by 6%

To put a 6% reduction in fuel usage into context, large ships can burn 300 tons per day so that would amount to a huge reduction in the amount and cost of fuel used.

It also means less wear on the engine, hence reduced maintenance costs.

SulNOx is also targeting the coal-fired power station market, which, like shipping, is another major source of pollution.

Coal-fired power stations use substantial amounts of heavy fuel oil (HFO) to ignite the coal that drives the turbines.

As with ships, adding an emulsifier mixed in the right quantity with water can sharply reduce the amount of fuel used and pollution generated.

Coal power might be on the way out in the west, but for many developing countries it remains the quickest and most effective way to meet surging demands for power.

SulNOx is not manufacturing its two products, but has licensed the know–how to giant chemical firm Nouryon, which is manufacturing them under its Berol brand.

SulNOx is responsible for the sales and marketing in return for a royalty.

Berol 6446 is the direct-to-engine emulsifier while Berol 6430 is the diesel conditioner that stops the growth of micro-organisms and improves engine efficiency.

Environmental attitudes changing

Nelson concedes that the shipping industry has proved notoriously resistant in the past to cleaning up its act, but says environmental attitudes are now shifting at a breakneck pace.

There is also some legal clout behind the calls for ships to be cleaner.

From 2020, a new International Maritime Organisation directive comes into force that demands a reduction in sulphur emissions to 0.5% from 3.5% currently.

“Ship owners don’t know how they are going to do it,” says Nelson.

Many are going to fit scrubbers on ships that use seawater to remove the toxic materials.

The issue here, however, is apart from being hugely expensive to fit, once the toxic material is removed it frequently just gets dumped over the side.

Nelson’s alternative is a much cheaper fit-out and use of its emulsifier in combination with a low sulphur fuel.

That combination reduces pre-heating costs by 15%, fuel consumption is improved and toxic emissions cut by 30% overall.

Multiple prizes

But Nelson has eyes on multiple prizes.

There are also two lorry trials underway in South Africa, which opens a third potentially lucrative avenue for the business.

Nelson says because of its arrangement with Nouryon its own capital requirements are low.

Ahead of the listing on NEX, SulNOx raised £500,000 plus a further £180,000 on admission which will provide enough funding as the business is well on the way to being self-funding.

At the placing price of 50p, SulNOx is valued at £40mln which suggests the timing of the float is spot on.

Just in shipping, there are 25,000 that run on Heavy Fuel Oil around the world, Nelson says, and change is afoot.

“Environmental talk has exploded.

“Up until now there has been no real pressure on shippers, but the taps are being turned full on now.”

Quick facts: SulNOx Group Plc

Price: 54 GBX

Market: NEX
Market Cap: -

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