Optimarin eyes future as USCG approval looms

The company has completed the required testing and is in the process of collating documentation to support its application – an expected 1,000-page document incorporating reports from NIVA and DNV GL laboratories as well as the full manuals for two systems: the two-lamp, 334m3/h system used for three land-based tests (across fresh, brackish and sea salinities); and the six-lamp, 1,000m3/h system installed on a globally operating Saga cruiseship for sea tests. Optimarin CEO Tore Andersen tells The Motorship that the company aims to complete the documentation by September, after which it anticipates that the USCG will be in a position to approve the system by the end of 2016.

“USCG won’t need to read the whole document,” he says. “What they have to do is look at what DNV GL and NIVA say about how to set the system power, so that it as low as possible but kills enough organisms. The laboratories have their idea but it is up to the US Coast Guard to set that limit. I don’t expect anything before a month to three months’ time, but there is some pressure on them now to make an approval.

“I hope that we, and perhaps the two or three electrochlorination systems that have also reported that they have completed testing, will not have to wait long. If there could be five or six before Christmas that would be fantastic for the shipowners because they could choose their system, and the USCG could end its exemptions – which would mean more sales for us.”

POLE POSITION

Optimarin believes it will be the first UV filtration system to be type approved after a USCG decision not to allow ‘most probable number’ sampling last year wrong-footed many of its competitors. “I hope there will be someone behind us because it would not make sense to be alone,” argues Andersen. “It is important to prove that the industry can do it [kill organisms with UV rather than simply stop them reproducing] as some shipowners have expressed doubts.”

As the report from Alfa Laval on these pages reveals, there are other UV systems now closing in on USCG type approval. But with more than 500 orders already on the books and a potential installation base of 25,000 existing vessels – the Optimarin OBS system is suitable for container ships of any size (due to the slow speed of unloading) and other vessels up to 60,000 dwt – the company is targeting “a very significant share” of the market.

Optimarin believes that around 30-40% of the world fleet will require USCG-approved systems, and the company has bet heavily on gaining approval – in particular by offering a ‘USCG type approval guarantee’ to one fleet buyer, Carisbrooke Shipping, to the effect that it would not have to pay for its systems if Optimarin did not secure approval. Andersen explains that the company is now so close to USCG approval that the guarantee is an irrelevance – the systems could likely not be installed before approval comes. But at the time, the guarantee worked to remove potentially difficult barrier to purchase.

With the IMO Ballast Water Management Convention teetering on the edge of entry into force [an expected ratification from Finland would fulfil the world tonnage requirement] and USCG type approval in sight, Optimarin believes the next few years will be crucial. The company reported that it has a loan-free capital base of NOK30-40 million (€3.2-4.3 million) with which to fuel the business, after most employees converted their loans to shareholdings.

PAYBACK TIME

Andersen says: “We’ve spent over two decades, and many millions of dollars, in our quest to develop the best, most compliant technology on the market. We have an excellent orderbook, stable finances and management and a very bright future ahead – with what we believe should be five to seven years of exponentially rising revenues.

“The oldest owner has been here for 25 years, and I hope that now is payback time. Out of 22 employees now, eighteen are shareholders. Together with the big shareholders they had given the company a loan that has now been converted into shares. That gives me, as the leader of the company, confidence that they trust what we are doing and they have an incentive to do it as best they can.”

Andersen believes that following the next five to seven years of expected strong growth, the market for spare parts, upgrades and installations on newbuild vessels will ensure a sustainable business. The company’s shareholders could also be open to a business combination at a later stage, he indicated, through an acquisition by either a more generalist supplier or one with a complementary BMWS offer. Alternatively, Optimarin could itself be in a position to play a role in the industry consolidation through an acquisition of its own, he suggested.

Andersen predicts that Optimarin’s position in the BWMS market would be reinforced by a consolidation in the number of systems available, from the 65 IMO approved systems today to around ten suppliers, based on experience in other technology sectors (including oily water separators).

“I’m not saying we are for sale now, but when you build up a company in this way, that has to be the expectation. The question then becomes when in the cycle is the best time? We will see. You have to build an orderbook, show you have a business to sell. But one way or another there will be a change in the market.”