21 July 2012

Seminar on “Leveraging on green ship recycling initiatives”:

Date: 10 July 2012
Venue: Maritime Institute of Malaysia

Shipbreaking, ship-scrapping and ship-dismantling often conjure images of unsafe and unhealthy work practices and a polluted coastal and marine environment. Of the many options available to end-of-life, phased-out, or non-profitable vessels, the easiest and often most profitable solution for the shipowner is to sell the vessel for scrapping. As such, a solution has to be found that would balance commercial, safety and environmental considerations for such practices.

The International Maritime Organization (IMO) adopted the International Convention on the Safe and Environmentally Sound Recycling of Ships (Hong Kong Convention) in 2009. The aim of the Hong Kong Convention is to ensure that ship-breaking operations do not pose any unnecessary risks to human health, safety and the environment. Taking the cradle-to-grave approach, the Hong Kong Convention covers the design, construction, operation and preparation of ships bound for dismantling.

In 2010, MIMA highlighted the economic potential of green ship recycling activities arising from compliance with the Hong Kong Convention.  Following from the study, a seminar on "Leveraging on green ship recycling initiatives" was organised to:

·         Present a broad perspective on green ship recycling initiatives
·         Provide an introduction to the ship recycling market, and
·         Explore the economic potential of a green ship recycling industry in Malaysia

The seminar was organised in two-parts. The first comprised a series of three lectures providing the information needed for further discussion in the second session which was a panel discussion on 'Can and should Malaysia develop its own ship recycling industry?' Participants representing ship owners, classification societies, financial institutions, recycling industry, federal and state government agencies, universities and trade associations attended the seminar.

Dr Nikos Mikelis from the IMO explained what ship recycling involves, where and what methods are used and the role of cash buyers and brokers in the ship recycling process. He shared information on the volatility in recycled volumes and prices, highlighting the inverse relationship between freight rates and recycled volumes. In his presentation, Dr Mikelis stated that criticisms on shipbreaking practices in Bangladesh, India and Pakistan have to be put in a proper perspective stressing that despite the negative perception, it remains essential to the economy and livelihoods of the community in those countries. He noted that Bangladesh, for instance, is taking active steps towards improving the health, safety and environmental standards of its shipbreaking yards. Dr Mikelis urged states to ratify the Hong Kong Convention as it provides the most practical and reasonable regulatory approach balancing the needs of recycling states with achievable health, safety and environmental standards. He then explained the structure of the Hong Kong Convention, its guidelines, and the processes involved in preparing a ship for recycling.

Mr Doebren Mulder presented on the Greendock solution for zero-pollution ship recycling. The Greendock solution is based on a 'Foil Dock' patented design which comprises a sealed area in which pre-cleaning and dismantling is performed. The Greendock provides an environmentally safe option for dismantling of ships should Malaysia consider it necessary to have facilities for ship dismantling. Alternatively, the Greendock solution is also a viable business model, providing pre-cleaning and dismantling services on behalf of shipowners and the steel industry.

In his presentation, En Nazery Khalid from MIMA emphasised the pertinent points pertaining to the Hong Kong Convention explaining that despite the inherent risks shipbreaking poses to human health and environment, it remains an important industry, not only to shipowners, but also to shipbreakers, recycling yards and local communities who depend on the industry. The industry provides employment opportunities and is feedstock for the steel and various other dependent industries. Materials salvaged from dismantled vessels are also reused by local communities. He concluded that ship recycling creates positive economic multiplier effects to local economies and employment.
Following the presentations, the panel comprising Dr Nikos Mikelis, Mr Doebren Mulder, En Nazery Khalid, Capt Abdul Samad bin Shaik Osman (Marine Department Malaysia), and En Zakariah bin Mohd Noor (Malaysia Marine & Heavy Engineering Sdn Bhd);  and moderated by YBhg. Dato Noor Aziz Yunan, Director-General of MIMA, discussed whether Malaysia can and should develop its own ship recycling industry.

The discussion highlighted that the sustainability of a ship recycling industry is dependent on demand for steel, location of yards, and labour and compliance costs. Whilst Malaysia is strategically located, further studies are needed to determine the feasibility of a ship recycling industry. It was suggested that the primary reason for the development of a ship recycling industry may be to fulfil a public service through the provision of facilities for safe and environmentally friendly ship dismantling rather than as a commercial venture. It was also suggested that ship recycling could be considered as an additional activity for shipyards with excess capacity.

Stringent environmental regulations, export regulations, and high cost of compliance are barriers to the development of a ship recycling industry. The main argument against Malaysia developing a ship recycling industry is concerns on the effect of such an industry on Malaysia's coastal and marine environment. The industry is perceived to be one which is dirty, dusty and dangerous, and which would require employment of foreign unskilled workers, contrary to Malaysia's aspirations towards becoming a developed and high-technology nation.  Nonetheless through investment in high-technology solutions, zero-pollution for ship recycling is achievable. It was concluded that although Malaysia has the capacity to develop a ship recycling industry, it remains debatable whether Malaysia should develop one.

The seminar provided the opportunity for MIMA to spearhead discussion on issues of current and critical importance in the maritime sector, and highlight the perspectives of various stakeholders on the ship recycling industry.
Source: Maritime Institute of Malaysia

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