31 December 2012

Desperate Bangladeshis turn to shipbreaking despite low wages and risk of death:

CHITTAGONG, Bangladesh — Mention “sweatshops” and Bangladesh in the same sentence, and images of hundreds of subservient, hard-working women hunched over sewing machines on a gloomy factory floor are likely to come to mind.

Hulk of a rusting cargo ship at Rising Steel Ltd. in Chittagong, Bangladesh — home to one of the largest shipbreaking operations in the world.

It wouldn’t be far from the truth. At the Chittagong Export Processing Zone — one of the world’s largest industrial parks — some 150,000 Bangladeshis, most of them women, assemble everything from Tommy Hilfiger polo shirts to Reebok running shoes. They toil eight hours a day, six days a week, earning only $37 a month on average. That makes them among the most exploited factory workers on Earth.

Nevertheless, these free-zone laborers have it a lot better than their counterparts in Sitakunda, a coastal village about 20 kilometers north of Chittagong.

Here, in a landscape dominated by rusting pipes, broken glass, electric cables and propellers rusting by the roadside, is ground zero of the world’s shipbreaking industry.

Even by Bangladeshi standards, this place is one massive eyesore.

We weren’t supposed to be here. Our 12-member international press delegation, which had been invited to Bangladesh to report on economic development and the fight against poverty, had visited the Chittagong EPZ earlier that day. A number of us, having heard that Bangladesh was a leader in shipbreaking as well as shipbuilding, pressured our government-appointed guide, Ziauddin Ahmed, to arrange a visit to one such operation.

To our surprise, the request was approved. We were even given permission to photograph anything we wanted — a switch from the free zone, where our movements and ability to shoot pictures were severely restricted.

As our minivan bounced along the road and entered the muddy premises of Rising Steel Ltd., we were met by three executives: Amjad Hossain Chowdhury, the company’s managing director; Hefazatur Rahman, chairman of the Mostafa Group of Industries, and Kamal Uddin, owner of Arafeen Steel.

The trio escorted us up the stairs to an air-conditioned conference room. Like everywhere else we went, a long table sat in the middle of the room, laid out with bouquets of flowers, cookies, sandwiches, fresh fruit and bottles of mineral water.

On the wall was a plaque in Bengali and English, notifying visitors that Rising Steel Ltd. and its workers “are committed to protecting the environment, health and safety of workers, customers and public by endeavoring to adhere to regulatory and industry standards across all our facilities, encouraging pollution prevention and striving towards continual improvements.”

Through the tinted glass, we looked out at the Bay of Bengal and the giant rusting ships nestled along the filthy shoreline like beached whales. Dominating the depressing panorama was the 400-meter-long Lara 1, an iron colossus described by fellow journalist John Vidal of The Guardian as “one of the largest corpses in the world’s biggest graveyard of ships.”

Uddin told us it would take gangs of oxyacetylene cutters nearly six months to dismember the Lara 1. And that’s only one of more than 250 ships — mainly of European origin — brought to Sitakunda at the end of their useful lives every year to be dismantled by hand, piece by piece, by workers earning an average $1.50 a day.

“The vessel you see is totally out of water,” he said, pointing to the half-stripped hulk. “We place an oil barge alongside the vessels and pump out the oil and toxic sludge. The oil does not go into the ocean because we sell it. We utilize everything.”

Said Rahman, whose company paid $20 million to buy the Lara 1 for scrap: “Every bit of this ship will be recycled, reused and resold. Nothing will go to waste. This ship will help build Bangladesh. We dismantle 2.4 million tons of steel a year from Chittagong, but we need four million tons to keep growing.”

That’s especially true for Bangladesh, a Florida-sized country of 160 million inhabitants without any iron ore resources. Hence, the nation’s construction industry depends on dying ships for its supply of steel. In addition, the shipyards recycle other vessel components such as propellers, generators and engines for extra cash.

If world steel prices rise, Rahman said his company could score a profit of $10 million. But if they go down, it could be a repeat of 2008, when Mostafa lost $20 million.

Chowdhury said his shipyard began operations in 1996, and that it produces around 200,000 tons of scrap annually. “Every employee must go through three months of training,” he said, estimating that shipbreaking employs 200,000 Bangladeshis directly and another million indirectly. The industry generates $1 billion a year for Bangladesh and provides nearly 60 percent of the country’s total steel demand.

Asked about safety issues, Chowdhury said a representative of the Ministry of Environment visits every week, and that “there have been no accidents here this year.”

Yet Muhammed Ali Shahin doesn’t buy that at all.

An attorney with Young Power in Social Action (YPSA), a non-governmental organization based in Chittagong, Shahin says “the shipbreaking yards are very dangerous, and workers are dying every day. Big metal plates fall on them, and they get injured. This is a very common scenario in the shipyards.”

Since the industry started in the 1980s, says Shahin, more than 1,000 workers have died — including 15 in 2011 alone. On May 31, 2000, an explosion aboard a decommissioned Iranian oil tanker left 16 workers dead and another 50 severely hurt.

The biggest causes of shipyard accidents are explosions of leftover gas and fumes in the tanks. Many workers are also electrocuted or crushed by falling beams or plates.

“Every day, hundreds of workers are getting injured,” said Shahin, noting that some work barefoot and that a number of them are teenagers. “Breaking ships is not an easy thing. These workers are not trained at all, but they’re forced to do this work because they need to survive.”

On average, he said, they earn 15 to 20 takas per hour — less than 25 cents. “They’re supposed to work eight hours, but they work 12 to 16 hours, and they don’t get overtime pay. The companies that sell those ships to Bangladeshi shipbreakers need to get rid of their old ships, and Bangladesh gives good prices because it has cheap labor and doesn’t need to develop facilities in an environmentally friendly way. They just buy the ships and break down on the shore without any investment in safety.”

During our visit to Rising Steel Ltd., every worker we saw was wearing a yellow helmet and safety goggles. But Shahin said even that’s deceptive.

“Maybe they knew visitors were coming, so they gave out helmets and boots for the workers. But normally they don’t provide safety equipment,” he said. “All of them are breaking the ships on the seashore, dumping hazardous wastes into the ocean. All the toxic liquids are going into the sea.”

It’s not as if nobody has ever complained about the shipbreaking industry before. Back in 1998, Baltimore Sun staff writers Will Englund and Gary Cohn shared a Pulitzer Prize for investigative reporting following a scathing series on the Navy and lax enforcement of labor regulations that took the journalists as far afield as India.

But the situation is even worse in neighboring Bangladesh, which thanks to its rock-bottom wages now controls 50 to 60 percent of the world’s shipbreaking industry. That’s according to Rizwana Hasan, executive director of the Dhaka-based Bangladesh Environmental Lawyers Association (BELA).

In 2009, BELA took the industry to court — and the court ruled that shipbreaking yards must comply with international law. It also found that every ship must be pre-cleaned of toxic substances before its arrival in Bangladesh.

But “nobody follows that law,” Shahin complained.

“If they cannot afford to do shipbreaking in an environmentally friendly way, they should not be allowed to do it at all anymore, because it’s destroying the ocean.”

Every ship, on average, contains at least a ton of toxic chemicals, all of which get dumped in the sea. “Last year they brought in 100 ships. That means in the last 40 years, you can imagine how much hazardous waste has been dumped,” he said. “The sea is already dead.”

Hasan agrees. She told us that in the three years since Bangladesh’s highest court ruled against them, 40 laborers have been killed.

“The shipbreaking yards are flouting the ruling of the Supreme Court because they enjoy political blessing,” said the attorney, who in 2009 was awarded the prestigious Goldman Environmental Prize for her activism on behalf of shipyard workers.

“The law on pre-cleaning is also being ignored. These ships have safe certificates but those certificates are meaningless. And whenever there’s a visitor to their yards, they make sure their workers have helmets. This is to give everyone the impression they’re improving work conditions,” said Hasan. “But if this was true, the number of deaths would have gone down, not up — and the shipbreakers cannot deny this fact.”

Source: Baltimore post examiner. By By Larry Luxner. 29 December 2012

26 December 2012

GMS report on Bangladesh shipbreaking industry for WEEK 51 of 2012:

Much like the Pakistani market at present Bangladeshi buyers are there to acquire preferred units whilst largely ignoring those vessels that actually are firm candidates.

A dearth of VLCCs, suezmax tankers, and capesize bulkers oil late has left Chittagong buyers somewhat frustrated. Even panamax bulkers of which there is still a decent supply are failing to attract the attention of local buyers whose eves are firmly focused on tonnage of 20,000 LDT and upwards.

By way of speculation, the larger LDT units make sense to cut these takes a number more months than the smaller vessels, which can be scrapped far quicker before getting a new one at a new price.

Hence, the reason India is the ideal destination for smaller units, with volatility on steel prices, currency and sentiment all too persistent currently.

Source: Steel Guru. 25 December 2012

GMS report on India shipbreaking industry for WEEK 51 of 2012:

As the lowliest of the Indian sub continent markets, it was another difficult week of decline and fall in Alang as cash buyers and owners struggled to get their vessels delivered at previous high prices.

Several as is deals with Indian hallmarks were however concluded by bullish cash buyers.

The Tsakos container vessel MSC BRASILIA achieved an extraordinary USD 442/LT LDT as is Singapore with 350 T bunkers ROB at the time of deliver. Bearing in mind, delivered containers are not even able to achieve this price; it was indeed a very brave and speculative move by the concerned cash buyer worth keeping an eve on!

By contrast the full spares Tanker built in Sweden PROVIDENCE obtained a bargain USD 400/LT LDT as is Singapore with 150 T bunkers ROB.

It is worth noting though that both of these deals could emerge as candidates for either Bangladesh (for both tanker and container) or Pakistan. At the end of the day, breakeven/positive prices will dictate the destination shores on which the respective cash buyer will eventually decide to head to.

Market sales reported –

(‘as is’ Singapore incl 350 T bunkers)
(‘as is’ Singapore with 150 T bunkers)

Source: steelguru. 25 December 2012

18 December 2012

GMS report on India shipbreaking industry for WEEK 50 of 2012:

Few signs of recovery existed this week in the Indian market as an end of year gloom descended on what has been an incredibly frustrating and volatile year in the Indian ship recycling industry.

There is little doubting the intensity of activity this year with volume records set to be broken, vet the currency and steel prices have proved to be such destabilizing factors over the course of the year that end buyers have become incredibly nervous arid indecisive when it comes to the actual buying.

Vessels continue to arrive and face difficulties either with description or on LDT proofs at time of delivery, especially those deals done at levels of USD 50 per LT LDT and higher last month. It is the role of the strong and reliable cash buyer now, more than ever, to see those high priced deals through and concluded without a hitch.

The two market sales for the week saw Odfjell sell another of their tankers for guaranteed green recycling the BOW LEOPARD (9,440 LDT) at USD 435 per LT LDT (including 70 T of solid stainless steel) and the good cargo carrying handy size bulker BELDE (7,500 LDT) sold for a very firm USD 410 per LT LDT. Both appear to be highly speculative deals on today's market.

Market sales reported -

USD 435/LT LDT (incl 70 T stainless steel

Source: Steel Guru. 18 December 2012

GMS report on Bangladesh shipbreaking industry for WEEK 50 of 2012:

As select buyers emerged for specific tonnage largelv the cape size bulkers and suezmax tankers/VLCCs vessels with 20,000 LDT and over, a whole raft of candidates either discharging in the area or coming from the East were mostly ignored, even at much lower levels.

These included, for the most part, older handy size bulkers discharging clinker in Chittagong poor cargoes, ownership, age and condition meant that most end buyers were simply unwilling to put them on their plots with other, more attractive option available to them.

On that note, there were rumors that the bulker ATTRACTIVE (7,46S LDT) was sold for a decent USD 40S.50 per LT LDT only for that deal to fail after the relevant cash buyer was unable to find an end buyer to beach the vessel.

Now more than ever, it has become imperative to find end buyers to take vessels before committing to a purchase, given the constant supply of tonnage in the market. Even those vessels considered to be favored units may garner no interest which has led to great frustrations amongst all cash buyers in the sub continent.

Mixed in with LC delays and new personnel handling NOCs for vessels to proceed inwards to beach, it has become a very challenging time in Bangladesh. Owners should now be prepared for greater waiting time/patience off the back of this.

Market sales reported -

USD 408.5/LT LDT

Source: Steel Guru. 18 December 2012

GMS report on Pakistan shipbreaking industry for WEEK 50 of 2012:

Pakistan established themselves this week as firmly ahead of their Indian competitors with a greater aggression to buy at better numbers.

Indeed, the Danish built, ABS class, full spares panamax bulker 05TSEE MERCHANT considered to be a prime Indian candidate was surprisingly concluded to Gadani buyers for a highly impressive USD 410 per LT LDT.

With a paucity of tankers currently on the market and a lack of overall demand for container vessels, reefers and other general cargo/MPP types, Pakistan buyers have to switch their focus back to bulkers. With a less volatile currency and steel market than India, firm Gadani buyers seem able to outbid their Indian counterparts on desired tonnage at present.

Market sales reported –


Source: Steel Guru. 18 December 2012

GMS report on shipbreaking industry for WEEK 50 of 2012:

The anticipated Christmas / New Year slowdown has shown few signs of beginning Just yet as all markets continue acquiring tonnage and previous deals / cash buyer 'as is' tonnage continues to arrive respective demo locations at pace.

Indeed even yards in Vietnam and the ever-busy Turkish market (which has supposedly secured more units, not LDT, than Bangladesh this year) took vessels for the week as owners aimed to cut their losses and put money in the bank to appease financiers and balance sheets before the end of the year.

Even an upswing in charter rates (amidst a dearth of tankers of late) has failed to slow die number of candidates especially with many vessels approaching surveys in die early part of the coming year. The current supply seems largely to be from the container sector (up to mid 90s built and sometimes even younger) and a whole rait of 80s built handysize (and occasionally older) bulkers.

India struggled on for another week really only taking green candidates and favored units with keen end buyers backing respective purchases. The Indian Rupee was still trading at excess 54 to the dollar and a recovery in steel prices has yet to be seen. Notwithstanding the recent volatility reigning in India, Cash buyer speculation still seems to be teetering into ongoing negotiations on the back expectations of a firming January.

Pakistan and Bangladesh were other die two Indian sub-continent markets of the moment with enquiries emerging for die larger vessels on offer, yet not necessarily the supply (certainly on the tanker side) yet forthcoming to satisfy that demand.

China remains open to buy all types of vessels from reefers, to passenger vessels to general cargos to capesize bulkers and tankers (gas free for man entry only). Levels come the end of the week were once again on die rise off the back of an improving stock market, and for diose vessels positioned in the area, the voyage over to Bangladesh no longer justifiable.

For week 50 of 2012, GMS demo rankings for the week are as below:

Market Sentiment
USD 385/lt Idt
USD 380/lt Idt
USD 415.lt idt
USD 375/lt Idt
USD 410.lt idt
USD 365/lt idt
USD 380/lt Idt

Source: steelguru. 18 December 2012

GMS report on shipbreaking industry for WEEK 49 of 2012:

With Christmas and an end to 2012 fast approaching, the overdrive of recent months appears to be dissipating somewhat as new deals slow, deliveries / beachings wind down and cash buyers, owners and end buyers alike continue to count their losses.

A record 55 vessels were beached in India last month with over 100 for both October and November combined, and a period of cool down is now perhaps needed as steel prices and the currency show few material signs of a prompt recovery.

With that in mind, prices remain firmly rooted below USD 400/LT LDT for standard dry vessels and slightly above for wet units. Pakistan was echoing the sentiment of their Indian neighbours with buyers only realty emerging at firm levels for select units while a whole swathe of average units continuing to seek market levels remaining unsold.

The same approach was true of Bangladesh for the right vessels (usually large LDT with decent specs and tankers strictly gas free for hot works), there were buyers emerging, but at far more underwhelming levels than had been anticipated for a market expected to return to form aggressively.

Indeed, even the recently recovered Chinese market settled back into their comfort zone this week, dropping back down to the mid-300s/LT LDT on both wet and dry candidates.

This all round apathy to acquire will perhaps characterize the end of the year with still plenty of vessels stocking local yards and a concerted period of digestion and stability in steel prices / currency needed in order for aggressive buying to resume.

Whether the New Year will bring with it a renewed energy and rejuvenated sentiment remains to be seen, but the markets at this stage could perhaps be forgiven for appearing a touch weary!

For week 49 of 2012, GMS demo rankings for the week are as below:

Market Sentiment
USD 390/lt ldt
USD 420/lt ldt
USD 3S5/lt ldt
USD 3S0/lt ldt
USD 410/lt ldt
USD 360/lt ldt
USD 380/lt ldt

Source: steelguru. 13 December 2012

World first for Chinese ship recycling yard:

China's Jiangmen Zhongxin Shipbreaking & Steel Co., Ltd. has received the world's first Statement of Compliance for Ship Recycling Facility. Issued by ClassNK, the Statement of Compliance (SOC) certifies that the facility and its recycling procedures are fully in compliance with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (Hong Kong Convention).

The SOC was officially presented to Zhongxin's Director, Mr. Liang by ClassNK Executive Vice President Toshitomo Matsui (left in photo) prior to ClassNK's Ship Recycling Seminar held in Tokyo this week, which drew more than 300 representatives from Japan's shipowning community.

This is the first time that a ship recycling yard has achieved certification in line with the convention.

Established in 1984, Zhongxin has grown to become one of the largest ship recycling facilities in China, with a working yard occupying over 400,000 square meters and an annual ship breaking capacity of over 500,000 LDT.

The yard has been a pioneer in green ship recycling, and earned recognition as an "AAAA" level Green Shipbreaking Enterprise from the China National Ship Recycling Association (CNSA) for its safe and environmentally sound ship recycling practices.

Green ship recycling has become an important issue in the maritime industry, especially following the adoption of the Hong Kong Convention. In addition to growing concerns about corporate social responsibility, new local and international regulations are helping drive the demand for high quality ship recycling facilities that can recycle vessels in an environmentally friendly and safe manner.

After a thorough review of the Ship Recycling Facility Plan (SRFP) developed by Zhongxin with the assistance of Wilhelmsen Ship Management, ClassNK, working as a third party certification body, confirmed that the recycling practices of the yard were in compliance with the Hong Kong Convention, and issued the world's first SOC to the recycling yard.

Source: marinelog, 14 December 2012

12 December 2012

Financing system proposed for environmentally sound shipbreaking

The European Parliament's Environment Committee will hold a first exchange of views this week on the proposed Ship Recycling Regulation. A financing system to support safe shipbreaking activities is among the main changes to the European Commission's proposal put forward in a draft report by the rapporteur for this legislative project, Swedish MEP Carl Schlyter (Green Party).

Mr Schlyter wants to introduce the financing system as an incentive to encourage dismantling of ships in facilities operating in an environmentally sound and safe manner, which currently face a competitive disadvantage due to the "extreme externalisation of costs" in the sector.

Source: EUWID. 27 November 2012


Industry calls to promote green ship recycling in Europe

Ship recyclers based in the EU are concerned that the future European regulation on ship recycling will divert even more end-of-life vessels to Asia and hamper their business instead of keeping this valuable stream inside the EU, according to a common Statement of Concern signed by major European ship recyclers and released today by the NGO Shipbreaking Platform. Addressed to the European Parliament and to EU Member States, the statement[1] calls on decision-makers to take into account the ship recycling capacity offered by European facilities rather than brush them off as not sufficient and leave the gates open for end-of-life vessels full of hazardous materials to be exported to developing countries.

Every year, about 1,000 ocean-going ships are sent for recycling, most of which end up on the beaches of South Asia. Shipbreaking in developing countries leads to disastrous environmental pollution and is often done in extremely dangerous working conditions.

“Keeping end-of-life vessels in the EU would ensure that hazardous waste in their structure – such as asbestos – is properly managed and that workers’ rights are protected”, says Patrizia Heidegger, Executive Director of the Platform. “We expect the EU to create sustainable jobs in green ship recycling facilities in Europe by guaranteeing a steady supply of end-of-life vessels to European ship recyclers”.

In its proposal for a regulation on ship recycling, the European Commission argued that European end-of-life vessels were exported to South Asia because capacities within the EU and the OECD would not suffice. However, the Commission failed to take into account facilities in Canada, the US, Mexico, and Turkey. A recent report[2] published by the Platform shows that all EU-flagged ships could be recycled in OECD facilities, without having to send them to the beaches of South Asia.

“The capacity for safe and environmentally sound ship recycling is here – it is a question of political will to demand and promote green ship recycling in Europe”, says Patrizia Heidegger.

Tomorrow, the European Parliament’s Environment Committee will be debating the Commission Proposal and the draft report by rapporteur Carl Schlyter MEP. Schlyter’s draft report[3], which was made public last week, supports the development of EU ship recycling capacity through a funding mechanism. This would be an incentive for shipowners calling at EU ports to recycle their ships in an environmentally sound and safe manner. Currently, European facilities can hardly compete with the prices offered to shipowners by sub-standard shipbreaking yards in India, Bangladesh, and Pakistan.

The NGO Shipbreaking Platform and Greenpeace EU Unit support this funding mechanism in their joint position paper on the European Commission Proposal[4]. The Platform is currently working on a survey that will detail how such a mechanism could work.


[1] The signed statement of concern is available here: http://bit.ly/V5OZHL
[2] The report “Industrial Capabilities of North America: A report on “green ship recycling in the United States, Canada and Mexico” is available here: http://bit.ly/T6wOSJ
[3] The draft report by Carl Schlyter MEP on the European Commission’s proposal for a ship recycling regulation is available here: http://bit.ly/Tj6kNh
[4] The joint position paper on the Commission’s proposal published by the Platform and Greenpeace EU Unit is available here: http://bit.ly/TGKbKi

NGO Shipbreaking Platform
Patrizia Heidegger
Executive Director
+32 2 6094 419
Roberto Ferrigno
Policy Adviser
+32 497 43 36 88

Source: Shipbreaking Platform. 27 November 2012

International Treaty Obligations on Dismantling of Toxic Ships

The Government has taken a number of steps to ensure environmental protection due to any damage caused by shipbreaking in the country, which include:

Ship recycling activity in India is regulated as per the directions of Supreme Court given in Writ Petition (Civil) No.657 of 1995. Verification of hazardous materials/wastes on board the ship, by way of inspection of ship, is done at anchoring stage by State Maritime Board, State Pollution Control Board and the Customs Department. Petroleum and Explosive Safety Organisation (PESO) for petroleum tankers/chemicals tankers and Atomic Energy Regulatory Board for war ships, atomic nuclear powered vessels, naval vessels, etc., grant necessary permissions after inspection at anchorage.

The State Maritime Boards issue beaching permission as per the laid down procedure. The following certification/clearances are required prior to issue of breaking permissions for any ship by the State Maritime Board:

(a) Gas free certificate being issued by the Inspector of Explosives.

(b) Decontamination Certificate from State Pollution Control Board.

(c) License issued by Directorate of Industrial Safety and Health, State Government.

In May, 2009, IMO has adopted the Hong Kong International Convention on Safe and Environmentally Sound Recycling of Ships. The Government of India has not yet ratified the Convention.

The above information was given by the Minister of State (Independent Charge) for Environment and Forests, Shrimati Jayanthi Natarajan to the Parliament.

Source: 7 December 2012