29 October 2013

Shipbreaking industry: Future perspective

SHIPBREAKING industry plays an important role in the economy of Bangladesh by supporting steel industry, shipbuilding industry and other heavy and light engineering industries, and also by generating employment. But problems regarding safety, health and environmental issues create a negative image for the industry.

Previously, shipbreaking was done in industrial nations, but because of the hazardous nature of the industry it shifted to south Asian countries where safety and environmental regulations are more relaxed. About 90% of shipbreaking in the world is done in India, Bangladesh, Pakistan and China.

International Maritime Organization (IMO) has been trying to implement guidelines/regulations/conventions for qualitative improvement of shipbreaking industry around the globe since 2003. The ‘Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships’ is one of them. The Hong Kong Convention (HKC) was adopted in May 2009 and started ratification from September 2009. It will come into force upon fulfillment of some requirements. It is applicable to all merchant ships greater than 500 gross tonnage (GT) as well as to all ship recycling facilities. The European Commission (EC) is also going to enforce the ‘European Regulation on Ship Recycling’ by the end of 2013. One of the key issues of both regulations, which directly affect the ship recycling industry, is the authorisation of ship recycling facilities. Many ship recycling yards which are not up to the mark may be eliminated because of restricted authorisation of ship recycling facilities.

When HKC comes into play, it is expected that a sea-change will occur in the shipbreaking industry. Even though Bangladeshi ship breakers are generally the highest payers among shipbreaking nations, they will face difficulty in bringing ships from outside without having necessary approval of their ship recycling yards. For example, for breaking a European owned vessel, it is the obligation of the owner/buyer to ensure that the vessel which is going to a particular ship breaking facility has got the necessary infrastructure and approval/authorisation from reputed organisations like classification societies so that environmental issues, safety and health of the workers are maintained by that ship recycling facility.

After framing of the Ship Breaking and Ship Recycling Rules 2011, there have been some positive changes in ship breaking industry in Bangladesh. The Norwegian Agency for Development Cooperation (NORAD) is working in Bangladesh for capacity building in shipbreaking industry. We should keep an eye on the activities of our main competitors like India and China because, to stay in this business, we need to achieve at least minimum standards in terms of health, safety and environment. We also need to take initiatives to cope with upcoming regulations for ship recycling industries.

The Department of Naval Architecture and Marine Engineering of Buet is doing research work on shipbreaking industry in Bangladesh over the last couple of years. A few seminars/symposiums have been arranged in line with the research work to share the knowledge with all stake holders, including policymakers from the government. Recently, ClassNK had arranged expertise training workshop on Inventory of Hazardous Materials (IHM) for shipbreaking industry at Alang, Gujrat, India. Two faculty members from the department of Naval Architecture and Marine Engineering (including myself) participated in this extensive workshop, which was sponsored by the sub-project ‘Modernization of Naval Architecture and Marine Engineering Program at Buet’ through UGC’s Higher Education Quality Enhancement Project (HEQEP, CP#2083). Two IHM experts from Germany and Japan demonstrated all the aspects related to shipbreaking and recycling industries. ClassNK also arranged field visit to Alang shipbreaking yards (which is one of the biggest shipbreaking yards in the world) for practical demonstration and to show their activities in some yards.

What we found was that Indian shipbreakers were conscious about upcoming HKC regulations, and were prepared to do anything for their business so that it was not affected negatively by the upcoming regulations. In the meantime, ClassNK is working closely with at least half a dozen shipbreaking yards at Alang for the approval of ship breaking facilities. Experts from Japan regularly visit these yards to see their activities. They analyse the GAP for the specific yard and recommend additional requirements to comply with HKC. Once the shipyard meets the necessary requirements, it will be certified as HKC compliant ship breaking yard.

To comply with HKC, Indian shipbreakers have already got centrally operated Treatment, Storage and Disposal Facilities (TSDF), which are used by all 160-170 shipbreaking yards located at Alang. Due to their favourable geographical location, every yard is able to beach the ship very near to its plot. As a result, it is very easy for them to use heavy machinery/crane facilities for breaking ships. At the same time, bilge-ballast water management and fuel oil management can be easily maintained. These yards are working with academic institutions like IIT, and continuously presenting their research works in seminars/conferences not only in India but also outside. As a result, the international community is fully aware about their good initiatives and may consider India as a good option for their ship breaking when HKC enters into force.

We should keep in mind that shipbreaking is something which is definitely going to be affected by the upcoming regulations. To hold our position in world shipbreaking, there is no other alternatives but to comply with HKC. On the other hand, it is not possible to comply with HKC overnight. We must upgrade the infrastructure for upstream and downstream waste management, and health and safety issues of the workers before trying to get facility approval of the yard. If we do not start the process right now, we might lose the business of shipbreaking in near future. We should also strengthen industry-academia collaboration for research work. The government can utilise the expertise of the Department of Naval Architecture and Marine Engineering to improve overall standard and image of shipbreaking industry so that it can be sustainable in the long run.

The writer is Professor, Department of Naval Architecture and Marine Engineering, Bangladesh University of Engineering and Technolgoy (BUET).

Source: the daily star. 28 October 2013


Islamabad, 29 October 2013 – The NGO Shipbreaking Platform and one of its member organizations, the Sustainable Development Policy Institute (SDPI) launched yesterday a research report titled “Pakistan Shipbreaking Outlook: The Way Forward for a Green Ship Recycling Industry” during a seminar held in Islamabad. The research report is a joint publication of the NGO Shipbreaking Platform and SDPI, and outlines policy recommendations for improving working conditions and environmental protection in the shipbreaking yards of Gadani.

“With our member organization SDPI, and with the rest of our coalition, we are calling on the Pakistani government to do the right thing and protect the workers and the environment from the dumping of thousands of tonnes of hazardous waste coming from end-of-life ships,” said Patrizia Heidegger, Executive Director of the NGO Shipbreaking Platform.

Contrarily to previous reports that focused mainly on the regulatory framework and the facilities needed to take care of the hazardous waste retrieved from the ships, ”Pakistan Shipbreaking Outlook: The Way Forward for a Green Ship Recycling Industry” also gives a voice to the exploited workforce in the shipbreaking yards, highlighting the risks they are exposed to on a daily basis. SDPI conducted a survey amongst shipbreaking workers in Gadani in 2012 to get their side of the story. The findings include the facts that workers’ rights are not sufficiently protected, notably health and safety rights, freedom of association, workers’ welfare and benefits, and contractual rights.

Syeda Rizwana Hasan, Chief Executive of the Bangladesh Environmental Lawyers Association (BELA) and Ritwick Dutta, an environmental lawyer from the Indian-based Legal Initiative for Forest and Environment (LIFE) said that if South Asian countries want to stop being the dumping grounds for developing countries’ toxic ships, they need to enforce international waste trade law.
“Our laws are weak and this is why these ships choose to come to our beaches,” said Syeda Rizwana Hasan. “We cannot paint this industry green, but we need to make it green. The report is the start of a long term process.”

BELA and LIFE are both member organizations of the NGO Shipbreaking Platform.

About 150 people attended the seminar presenting the report, including researchers, representatives from governmental institutions and policy makers. Amongst others, two members of the National Assembly of Pakistan, Arifa Khalid and Romina Khurshid Alam, and the director general of the Balochistan Environmental Protection Agency, Naseer Khan Kashani were present and welcomed the publication of the research report.

“With a joint effort by the relevant government bodies, shipbreaking industry, civil society and a special support from international organisations we can turn this business into a modern and safe industry,” said Patrizia Heidegger.
The report can be downloaded here:

Delphine Reuter
Communications Officer
NGO Shipbreaking Platform

Why ship scrapping activity affects dry bulk shippers:

While shipping scrappage activity does affect supply, it’s best suited to get an immediate to medium-term assessment of supply and demand dynamics (depending on how you slice and dice it). The rate at which companies scrap ships often reveals whether the dry bulk shipping industry is facing excess capacity. When excess capacity pressures the shipping industry, firms will often retire older ships to relieve pressure on shipping rates and maintenance costs.

Scrapping activity rises, but remains in downtrend

On October 18, the total number of ships retired since IHS Global Limited began collecting the data in 2005 rose 7 vessels from a week ago, reaching 2,709 vessels. On an eight-week moving average basis, used to show a clearer trend, the number of vessels scrapped rose from 7.74 to 7.75 the recent uplift that we’ve seen.

As we mentioned in previous updates, the late increase in scrappage could reflect some near-term weakness in the dry bulk sector. However, companies have been scrapping fewer and fewer vessels since June 2012, which is a medium- to long-term positive. As new ship deliveries are coming down after years of significant supply additions, there should be less of an incentive for managers to scrap vessels. We should see scrapping activity fall to levels seen during 2009 and 2010 in late 2014 or 2015.

Falling scrappage is actually positive, not negative

Companies often report the number of ships available to scrap as evidence of limited supply concerns, but the reality is that several ships do celebrate birthdays beyond 25. Managers are also unlikely to scrap ships just because they’re old and will often try to hold on to old vessels as long as they can find customers to use them.

So although the industry can scrap another 200 ships, investors should see falling scrappage as a positive sign that shipping rates are rising. Besides, when shipping rates do recover, second-hand vessels actually increase in value way more than new-build prices—another key indicator.

Why the current trend is positive for dry bulk shipping companies

As long as scrappage activity continues to fall over the medium-term trend, it’s a positive indication that fleet utilization (supply and demand dynamics) is tightening, which is positive for shipping rates and stocks like DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Safe Bulkers Inc. (SB), and Navios Maritime Holdings Inc. (NM). The Guggenheim Shipping ETF (SEA) will also benefit. In the near-term, we could see some weakness in share prices if scrapping activity continues to rise.

Source: shipping tribune. 28 October 2013

GMS weekly report on Indian shipbreaking industry for WEEK 43 of 2013:

A downturn in steel prices this week left many of those speculative deals of the past fortnight in trouble as vessels continued to arrive unsold and various cash buyers had no other choice but to beach on their own (or affiliate) plots for a significant loss.

The Danaos container LOTUS was (reportedly) one such case in point, having been sold at an unthinkable USD 454/LT LDT several weeks back.

There was also talk of a number of deals failing. Having been bought well above market initiallv, leaving unscrupulous cash buyers no other choice but to take the hit or walk away from the deal. Another example were the several Turkish owned bulkers that came back onto the market, having been oversold recently.

The conundrum of the dual market (prices offered by local buyers vs. cash buyers) as discussed in these very pages only last week, only works if the market comes up to meet those bold cash buyers who are buying ahead of reality, gambling on an upswing in prices. If levels do not move in the direction those cash buyers had hoped for, then deals start to unravel very quickly as we have seen this week - much to the annoyance of owners who had put their faith in the strong numbers on show.

The Rupee spent another encouraging week trading in the 61s to the US dollar, and for the first time in almost half a year, it could be said that a certain stability is emerging with the currency locally.

Source: steel guru. 29 October 2013

GMS weekly report on Pakistan shipbreaking industry for WEEK 43 of 2013:

Following the sale of the Embiricos controlled VLCC DELOS (42,318 LDT) last week for a firm USD 435/LT LDT, it was interesting to see another VLCC sold for similar levels as Meiji shipping of Japan sold their T. M. HARMONY (37,833 LDT) for a very decent USD 436/LT LDT.

The deal actually has an option for an 'as is' Sakai, Japan delivery with about 1,100 T bunkers ROB (just sufficient for the voyage across) at USD 423/LT LDT. Should the deal be declared 'as is', in Seller's option, the concerned cash buyer may decide to assess the gas free status (vessel currently only gas free for man entry clean) before deciding whether to clean and take to Bangladesh in a gas free for hot works condition.

Petrobras of Brazil continued their clearout of older tonnage with the sale of the MR tanker RODEIO (9,261 LDT) for USD 2.7 million 'as is where is' in Rio. Three parties had supposedly accepted the counter before the deal was awarded to the successful bidder.

Source: steel guru. 29 October 2013

GMS weekly report on Bangladesh shipbreaking industry for WEEK 43 of 2013:

The first week back after Eid holidays saw very little changes to the status quo in Bangladesh, with prices stagnant even if demand appeared to be returning.

Cash buyers began negotiating many of their 'as is' vessels - yet prices remained some ways away from expectations. For that reason, there were very few market sales to speak of - particularly whilst competing sub- continent markets continue to perform relatively well.

Pakistan has been the market for most of the VLCCs sold recently - with the simple fact that it can take vessels gas free for man entry as opposed to hot works clean (and the significant costs associated with it).

Meanwhile, the continued political turmoil caused by the opposition partv strike has resulted in At least 5 deaths in the last few days, which is another unsavory distraction for those in Bangladesh and is one that has plagued the country for the most part of this year.

Source: steel guru. 29 October 2013

GMS weekly report on ship breaking industry for WEEK 43 of 2013:

For the second consecutive week, news of a VLCC sale at impressive levels reverberated around the industry. It appears that Pakistan is the market player when it comes to such units - even if the vessels are positioned in the Far East due to their low inward clearance expenses, no beaching tide requirements, and capacity to take tankers gas free for man entry onlv, as compared to the hot works requirements of both India and Bangladesh.

Just as India geared up for Diwali, both Pakistan and Bangladesh emerged from Eid holidays, somewhat invigorated, but not sufficiently, so as to bring about a major improvement in price that many cash buyers had been gambling on. For this reason, tales of failing deals once again began to emanate in the market, particularly for those vessels purchased in recent weeks at levels entirely apart from the local realities. Indeed, many cash buyers have begun to pay for their excessive enthusiasm with deals, reputations, and money all lost - a cautionarv tale for owners simply chasing the top dollar.

Whilst demand and enquiries are emerging once again in Pakistan and Bangladesh particularly for the larger units on offer prices have yet to jump up significantly. Cash buyers are discussing a number of their 'as is' units, yet end buyers seem reluctant to meet asking prices so far. With India out of action during Diwali holidays, it will be interesting to see how both markets respond and take on the burden of securing market tonnage.

After an impressive showing throughout October on both steel prices and the currency, it was a disappointing week overall in India where levels began to tail off in the buildup to holidavs, largely through a weakening of steel prices bv as much as USD 10-I5/LT L.DT. China likewise remained static as domestic steel plate prices continued to stutter. Finally, the Turkish market continued its upswing with the purchase of the small LPG vessel HAPPY HARRIER (2,159 LDT) for a firm USD 470/LT LDT (with about 26 Tons of 9% Nickel Steel in the tanks, being the reason for the premium).

For week 43 of 2013, GMS demo rankings for the week are as below:

Market Sentiment
USD 390/lt ldt
USD 420/lt ldt
USD 385/lt ldt
USD 420/lt ldt
USD 385/lt ldt
USD 420/lt ldt
USD 330/lt ldt
USD 340/lt ldt

Source: steel guru. 29 October 2013

Board for regulating shipbreaking:

The industry minister announced recently that the government is going to enact a law to set up a board for controlling shipbreaking and re-cycling industry in order to save the environment as well as improving the working condition of the workers in the industry. Question has risen whether it is necessary to set up a new entity while Bangladesh has a Department of Environment and a Department of Labour.

Creation of a board would overlap the responsibilities of the above-mentioned departments. The government can assign specific additional responsibilities to the Department of Environment and to the Department of Labour amending the laws concerned to improve the situation of shipbreaking and re-cycling industry that government is planning to assign to the board.

I would, therefore, like to urge the government not to set up a separate board for controlling performance of shipbreaking industry aiming to safeguard the environment as well as interest of workers rather assign the planed responsibilities to Department of Environment and department of Labour.

Md Ashraf Hossain
Raman, Dhaka

Source: the financial express. 4 July 2013

27 October 2013

Strasbourg plenary: Ship recycling vote receives mixed reaction

Policymakers, stakeholders and NGO's express the need to ensure that ship owners are forced to apply the polluter pays principle following the plenary vote on ship recycling.

Ingvild Jenssen is a policy advisor at NGO shipbreaking platform

Without a financial incentive, circumvention of European law covering end-of-life vessels will persist and European ship owners will be allowed to continue to seek significant financial profits by externalising environmental and human health costs to the shipbreaking beaches of Bangladesh, India and Pakistan, and to the exploited workforce there.

The new Ship recycling regulation does nothing to prevent ship owners from jumping register to a non-EU flag prior to sending their ships for breaking in order to avoid falling under the requirements of the law. In 2012, three quarters of European owned vessels broken on the beaches of South Asia were registered under non-EU flags such as Panama, Liberia and Bahamas. With the new regulation being a further incentive to flag out, vessels still registered under a flag of an EU member state at end-of-life is likely to decline even further to a disillusioning number of ships, rendering the impact of the ship recycling regulation non-existent for the purpose of improving ship recycling practices.

The new regulation asks the European commission to elaborate on the possibilities of a financial mechanism to enhance clean and safe ship recycling. Recent studies have proposed an array of possible mechanisms to implement the polluter pays principle for end-of-life ships and have clearly shown that a financial incentive for proper ship recycling is legally feasible, enforceable, and necessary to ensure compliance with the law.

Sabine Wils is the GUE/NGL group shadow rapporteur on Ship recycling

Unfortunately, the original report on ship recycling changed substantially due to plenary votes and trialogue outcomes. In fact, the report has been watered down so significantly that I could not vote in favour but voted against it.

Why? Well, ships which are going to get scrapped are classified as hazardous waste and should be dismantled in proper facilities. However, last year alone at least 265 European ships were recycled on beaches in South Asia (the so-called beaching). The conditions on these beaches are horrible for the workers and the environment respectively: many workers suffer from severe injuries due to hardly any safety at work (gashes at their feet and arms, asbestos inhalation, falls from great heights etc.). In addition, oil and other chemicals flow into the sea or ooze onto the beach while metal objects of all sizes and other waste is rotting away without necessary provisions.

In contradiction to what some MEPs say, the report will not make beaching impossible. In addition, the report lacks a monetary incentive (either realised with an extra harbour fee or a fund) directed at ship-owners to recycle their ships only in a safe and environmentally-friendly way. Thus, the two most important issues concerning ship recycling are not sufficiently tackled since the interests of the ship-owner is to make as much money as possible from scrapped ships take priority over a strong and sound regulation.

Isabelle Ryckbost is secretary general of European sea ports organisation (ESPO)

The new EU regulation will allow ships flying the flag of an EU member state to be scrapped outside the EU provided that strict standards are met. These standards effectively mean the end of "beaching" where ships are simply taken apart on a beach, with consequences for human health and the environment. Regular inspections, commission assessments and an increased role for NGOs will assist in ensuring compliance with these standards. Finally, under the new regulation, the commission is required to come up with a proposal on the feasibility of an incentive mechanism three years after entry into force.

We welcomed the balanced outcome of the political process on ship recycling. Conscious ship recycling is an important issue with serious social and environmental impacts. In that respect, ESPO urges member states to ratify the 2009 Hong Kong international convention for the safe and environmentally sound recycling of ships as soon as possible, allowing its global application. Furthermore, we remain at the disposition of all parties involved in view of further discussing the appropriate application of the polluter pays principle in ship recycling.

Source: Parliament. 25 October 2013

Shipbreaking gets large liquidity:

KARACHI, Oct 26: Shipbreaking industry showed hyper activity within first three months of the new government.

A report issued by the State Bank showed that credit off-take by the shipbreaking industry shot up between July and September.

Overall manufacturing sector showed no signs of improvement. Instead, a significant decline was visible in their credit off-take from the banking industry during the quarter.

According to the State Bank, credit off-take by ship-breaking industry rose by Rs3.5 billion to Rs18.245bn till end September, 2013.

However, credit off-take by the entire manufacturing sector witnessed a sharp decline of Rs26bn to Rs1422bn, reflecting poor state of economy and disappointing manufacturing sector growth.

Since the inception of the new government, it was widely expected that Prime Minister Mian Nawaz Sharif would wake up sluggish economic activities with some new ideas and new economic policies, but so far no strategy has been introduced at the highest level.

It was not known to bankers why liquidity suddenly started floating towards the shipbreaking industry.

However, informed sources said that the new government is interested in seeing the shipbreaking industry flourishing like it had been in the past.

The bankers had no reasons for other sectors to be ignored by the banking industry.

The most important sectors, like textile, have yet not shown willingness to improve their performance.

According to the State Bank, textile sector which is largest consumer of banking loans (now mostly for working capital) added only Rs328 million in three months in their total loans worth Rs515.230bn.

The textile industry has been crying over higher interest rate when the State Bank increased the interest rate by 50 basis points to 9.5pc last month.

Since the cost of production has risen significantly due to massive devaluation of local currency, exports could see a dent during the current fiscal year. Textile exporters use up to 30pc imported constituents for their exportable products.

Another important industry of footwear noted a decline in the credit off-take by Rs544m during this period.

However, for the first time during the last 100 days since beginning of new fiscal year, private sector borrowed Rs14bn from the banking sector.

According to another SBP report, private sector’s net borrowings in the last fiscal year were minus Rs19bn which means private sector kept retiring debts in FY-13.

Source: Dawn. 26 October 2013

26 October 2013

BD to fully depend on local billets in two years:

Large investments made by market players
Bangladesh will fully depend on locally manufactured billets within two years as large investments have been made by some market players, said steel mill owners.

Billets, metal bars in semi-finished state, are the main raw materials for manufacturing steel products for the construction industry. Leading companies which produce them, import these metal bars to fill the gap in demand.

Due to high demand for quality billets the market players themselves have invested money to produce this steel product in the country, sources said.

Currently the ship breaking industry cannot meet the whole demand from the steel and re-rolling mills for scrap iron, from which billets are being manufactured.

Chairman of Bangladesh Steel Re-rolling Mills (BSRM) Ali Hussain Akberali said, "I do not get enough iron scrap locally as per my demand to manufacture billets."

Leading companies do not manufacture steel products directly from iron scraps, he said adding, "I myself do not get quality scraps for manufacturing billets at my factory. I can only get 30 per cent of my requirement."

"To meet the growing demand for steel products I need billets and it is met from my own factory. I also have to import some quantity," he said.

Mr Akberali said a good number of mills which were once just re-rolling mills are now manufacturing billets and when the companies currently in the pipeline start production, billets import will stop automatically.

A source in the ship-breaking industry said iron scraps currently available are not enough to feed the billet manufacturing units but if scraps are available locally, we'll be able to save a huge amount of foreign currency.

He said as the trend of manufacturing quality steel products are there in the market, so producers of low quality steel would be discouraged in the coming days.

He said steel products manufactured from locally available iron scraps are not in any way of inferior quality than the imported billets. Rather it is better as we devote our attention to quality.

Bangladesh can have its own iron scraps from the ship breaking industry if high technology is used in the breaking yards, a Bangladesh Ship-breaking Industry Association office bearer said.

He said if local ship breaking industry fails to supply quality iron scraps to the billet manufactures, import of shirred scraps which is currently being imported by some leading companies would increase.

To meet the demands for iron scraps locally the ship-breakers are thinking to adopt new technology in their yards to convert iron scraps into shirred scraps, he said.

Source: the financial express. 15 October 2013

Costa Hires Lift Ship to Transport Wrecked Concordia:

Costa has hired one of the world's largest lift ships to remove the now-righted wreck of Concordia from the Italian island of Giglio, according to news reports.

Costa Crociere signed a $30 million contract with the Dutch Marine salvage company, Royal Boskalis Westminster, to use Dockwise Vanguard a semi-submersible ship specifically designed to carry other vessels, to transport Concordia, Reuters reported Thursday.

The article reported that Costa has not yet decided where the scrapping will take place, although it said it could happen in “mid-2014.” "Alternatives under review include scrapping the vessel in Italy," Royal Boskalis Westminster said in a statement, according to the story.

According to the story, the Vanguard would start the process by taking on water into its ballast tanks, “allowing it to sink beneath the water line. Then, the Concordia will be maneuvered to float above the lift ship, which will be refloated” with the former cruise ship aboard.

The trial of Concordia's ex-captain, Francesco Schettino, is ongoing.

--By Chris Gray Faust, Destinations Editor

Source: cruise critic. 12 October 2013

HSH Nordbank may scrap seized ships with no buyers:

HSH Nordbank has signalled an intention to scrap dozens of ships seized from indebted clients, if the shipping bank fails to sell them, a news report said.

Rune Hoffmann, a spokesman for HSH Nordbank, told Bloomberg that potentially 30 to 40 of the 1,100 vessels in the restructuring unit might be affected.

“If a ship is no longer supported by its owners and we don't find a buyer, then an insolvency or scrapping of the vessel may become the last option,” Hoffmann was quoted as saying.

HSH Nordbank is seeking to reduce its non-performing loans on its balance sheet. The sluggish business atmosphere in the global shipping market has caused some of the bank's clients to struggle with paying back their debts.

The bank's shipping loans totalled EUR25bn ($33.8bn), of which EUR9bn are part of the restructuring unit established in 2009, according to Wolfgang Topp, head of operations at the bank. About 15% or around 165 of 1,100 vessels in the unit are not salvageable, while the remaining 85% may be restructured, he revealed last month.

In April this year, HSH Nordbank sold 10 ships comprising of five tankers and five boxships to Greek shipping firm Navios Group, allowing the bank to reduce its stock of bad loans. Navios paid $130m in cash and took a 10-year loan of $170m to acquire the 10 ships.

Source: seatrade-global. 26 October 2013

EU Attempt to Ensure a Safe and Clean End to Freight Vessels as Ship Breaking Dangers Highlighted:

Honourable Effort to Legislate Far Outside European Territories Will Be Difficult to Enforce When Profit is the Motive

WORLDWIDE – EUROPE – Globally, around one thousand large end-of-life ships are broken up and recycled every year, particularly during times of overcapacity, as we have seen of late in the bulk (and to a lesser extent in general cargo and container shipping) markets, with numerous freight carrying vessels proving of more worth as scrap rather than lying idle. Most ship breaking takes place in South Asia, often on tidal beaches and under dangerous conditions as we have highlighted in some detail previously. Whilst the industry provides thousands of jobs for migrant workers, a lack of environmental protection and safety measures leads to high accident rates, health risks and extensive pollution of coastal areas. In an effort to reduce these negative impacts on EU-registered shipping, the European Parliament has backed plans to end the scrapping of old ships flagged in an EU member country, on third-country beaches and ensure they are recycled in EU-approved facilities worldwide instead.

Non-EU ships will also be covered by the regulation insofar as they will have to carry an inventory of hazardous materials when calling at EU ports. Enforcement measures, including penalties, are to be set by member states. In future, EU-registered ships will have to be dismantled in EU-approved ship recycling facilities which must fulfil specific requirements, be certified and be regularly inspected. Carl Schlyter (Greens/EFA, Sweden), who steered the legislation through Parliament, said:

"I want to stress that this is not an attack against India, Bangladesh or Pakistan - the countries that currently practice beaching - but against the dangerous and highly polluting practice of beaching itself. This regulation incentivises these countries to make the necessary investments in proper ship recycling facilities - above all for the sake of safe and environmentally-sound jobs in their countries."

During the negotiations, Parliament strengthened the proposed requirements by obliging ship-recycling businesses to operate in built structures, which must be ‘designed, constructed and be operated in a safe and environmentally sound manner’. They must hold in hazardous materials throughout the recycling process and handle them and their waste only on impermeable floors with effective drainage. Waste quantities will have to be documented, and their treatment authorised only in waste treatment or recycling facilities.

The Commission agreed it will have to report on the feasibility of a financial instrument to facilitate safe and sound ship recycling and, if appropriate, present a legislative proposal within 3 years of the entry into force of the regulation. The regulation will apply to ships at the earliest 2 years and at the latest 5 years after its entry into force, the eventual date depending upon when the recycling capacity of facilities on the EU list exceeds a threshold of 2.5 million light displacement tonnes with the regulation applicable from one year after it enters into force.

Unfortunately the ship breaking business is carried out in the most cost effective way possible and it is doubtful that the EU will be able to control an industry which needs legislating possibly more than just about any other. It will require the glare of publicity to ensure that responsible ship owners do not sell off excess tonnage to the highest bidder with no guarantee that this will not lead to a quick re-flagging to some third world register before hitting the beach at Alang or elsewhere in the now time honoured, and unsafe, insanitary and downright dangerous, tradition.

Source: handy shipping guide. 26 October 2013

Boskalis wins $30 mln contract to remove wrecked Concordia:

Oct 10 (Reuters) - Dutch marine salvage company Royal Boskalis Westminster won a 30 million dollar contract to remove the wrecked cruise ship Costa Concordia from the waters around the Italian island of Giglio, the company said on Thursday.

Following the successful righting of the gigantic floating hotel last month, Boskalis will load the 114,500-tonne liner onto its vessel, the Dockwise Vanguard, the world's largest lift ship, which will then take the liner away to be scrapped.

The Vanguard will take on water into its ballast tanks, allowing it to sink beneath the water line. Then, the Concordia will be manoeuvred to float above the lift ship, which will be refloated, now with the Concordia aboard.

"The Concordia can be loaded as a whole onto the Dockwise Vanguard and safely transported to a location where she can be scrapped," the company said in a statement.

The company said its client, cruise ship operator Costa Cruises, had not yet decided on where the scrapping would take place, but said the removal operation would take place around mid-2014.

"Alternatives under review include scrapping the vessel in Italy," the company said.

Another Boskalis subsidiary, SMIT Salvage, provided emergency response services immediately after the accident in January 2012, which killed 32 of the 4,000 aboard. But Boskalis lost the main salvage contract to a rival U.S.-Italian consortium. (Reporting By Thomas Escritt; editing by Stephen Nisbet)

Source: reuters. 10 October 2013

Frigates head for the scrapyard:

THE Royal Navy’s former HMS Chatham today started a sad exodus of frigates from Portsmouth Harbour.

The former Type 22 frigates Chatham, along with her sister ships Campbeltown and Cumberland, are all leaving Portsmouth for the last time this week, bound for a Turkish scrapyard.

A fourth frigate, Cornwall, will remain until a later date.

The four ships, which were all axed in the government’s 2010 defence cuts, were sold to two different firms for recycling.

Three of the frigates will go to Leyal Ship Recycling, the same firm which is cutting up Ark Royal. The fourth frigate will go to a UK shipbreaker.

Pete Sandeman, of savetheroyalnavy.org, told The News: ‘It was a very sad day for the navy when the Type 22s were scrapped.

‘They had capabilities that the remaining Type 23s don’t have.

‘The navy made the right choice to get rid of them because they are very expensive to run, but it’s the government’s fault for forcing them to do it.

‘If they were being scrapped to make way for new ones, that would be one thing.

‘But we’re not likely to see the next generation of frigates until after 2020, which is a huge gap.’

Chatham is due to leave Portsmouth under tow today at around 2.30pm.

Campbeltown will leave on either Thursday or Friday.

Cumberland may leave next Tuesday.

There is no date yet for the departure of Cornwall.

A spokesman for the MoD said: ‘Following competitions, two contracts have been awarded to recycle the four former Type 22 frigates Cumberland, Campbeltown, Chatham, and Cornwall.

‘A contract for three of the ships, Cumberland, Campbeltown, and Chatham, has been awarded to the Turkish recycling company Leyal Ship Recycling.

‘The contract for the fourth ship, Cornwall, has been awarded to Swansea Drydocks, a UK recycling company based in South Wales.

‘All four ships will be recycled.

‘The sale of all four ships will result in a total receipt to the MoD of just under £3m.’

Source: Portsmouth. 8 October 2013

Portsmouth Based Ship To Be Scrapped:

Portsmouth based former ice patrol ship HMS Endurance is to be scrapped.

The Ministry of Defence decided it would cost too much to repair after it was damaged by flooding in Chile in 2008.

The move comes as three former Type 22 frigates are set to be towed from Portsmouth Naval Base to the Leyal Ship Recycling centre in Turkey.

The first to leave is Chatham, which is departing today, followed by Campbeltown and Cumberland, with Cornwall set to sail for Wales at a later date.

Endurance, known as Red Plum, was severely damaged by flooding in the incident in South America.

A total of 15 civilians had to be airlifted off the ship following the leak which was caused by a faulty valve.

The ship's role as the Navy's Antarctic patrol vessel has been taken over by HMS Protector, a former Norwegian research ship which was given a refit for its new role.

A MoD spokesman said:

''To bring HMS Protector up to the Royal Navy's world-class standards, 5 million was invested in improved communications systems, enhanced armour protection and specialist hydrographic equipment including a survey motorboat.

''HMS Endurance is due to go out of service in 2015 and, given the level of damage she sustained and the subsequent deterioration of the ship, it was not considered economically viable to repair her.

''The purchase of HMS Protector offers good value for money and secures the UK's long-term ice patrol survey capability.''

Source: 8 October 2013

MOD scraps ice patrol ship HMS Endurance:

The Royal Navy's former ice patrol ship HMS Endurance is to be scrapped after the Ministry of Defence decided the cost of repairing the vessel, which flooded off the coast of Chile in 2008, was too great.

The move comes as three former Type 22 frigates are set to be towed from Portsmouth Naval Base to the Leyal Ship Recycling centre in Turkey - the same scrapyard which bought the Ark Royal aircraft carrier. A fourth frigate is also to be taken to the Swansea Drydocks to be dismantled.

The first to leave is Chatham, which is departing today, followed by Campbeltown and Cumberland, with Cornwall set to sail for Wales at a later date.

Endurance, known as Red Plum, was severely damaged by flooding in the incident in South America. A total of 15 civilians had to be airlifted off the ship following the leak which was caused by a faulty valve.

The ship's role as the Navy's Antarctic patrol vessel has been taken over by HMS Protector - a former Norwegian research ship which was given a refit for its new role.

A MoD spokesman said: "To bring HMS Protector up to the Royal Navy's world-class standards, £5 million was invested in improved communications systems, enhanced armour protection and specialist hydrographic equipment including a survey motorboat.

"HMS Endurance is due to go out of service in 2015 and, given the level of damage she sustained and the subsequent deterioration of the ship, it was not considered economically viable to repair her.

"The purchase of HMS Protector offers good value for money and secures the UK's long-term ice patrol survey capability."

The spokesman said the sale of the four frigates raised just under £3 million.

He said: "Following competitions, two contracts have been awarded to recycle four former Type 22 Frigates (Cumberland, Campbeltown, Chatham and Cornwall).

"A contract for three of the ships (Cumberland, Campbeltown and Chatham) has been awarded to the Turkish recycling company Leyal Ship Recycling. The contract for the fourth ship (Cornwall) has been awarded to Swansea Drydocks, a UK recycling company based in South Wales. All four ships will be recycled."

Source: British Forces News. 8 October 2013

Discharge of toxic waste: Gadani's ship breaking industry threatens marine life: WWF-P

WWF-Pakistan believes the ship breaking industry in Gadani area of Balochistan threatens marine life with unchecked discharge of toxic waste into Arabian Sea. A technical advisor on Marine Fisheries at WWF-Pakistan, Muhammad Moazzam Khan, said "Gadani is a part of Sonmiani which is considered to have a rich marine biodiversity especially around Churna and Kaio Islands."

WWF-Pakistan believes the ship breaking industry in Gadani area of Balochistan threatens marine life with unchecked discharge of toxic waste into Arabian Sea. A technical advisor on Marine Fisheries at WWF-Pakistan, Muhammad Moazzam Khan, said "Gadani is a part of Sonmiani which is considered to have a rich marine biodiversity especially around Churna and Kaio Islands."

He warned that dumping of toxic waste may seriously hurt the fragile ecosystem of the area. WWF-Pakistan has urged the concerned environmental departments to step up against the toxic chemicals laden vessels brought to Gadani ship breaking industry for dismantling to protect the marine life.

Showing concerns it said that the unplanned construction such as Gadani fish harbour already had serious impact on the area's environment - which is also designed as energy corridor. It feared the construction of power plants may also hurt the marine environment of the entire area if proper measures were not taken. Director, WWF-Pakistan, Rab Nawaz, called upon Federal Board of Revenue, Port Authorities, Balochistan Environmental Protection Agency and Pakistan Customs to help reduce import of vessels laden with toxics to protect environment.

An international watchdog organisation - Ship breaking Platform has asked the South and Southeast Asian nations to halt importing damaged and toxic laden ships for dismantling. The WWF-Pakistan has supported the call by the platform and urged the local importers to avoid berthing hazardous vessels to the country's coasts.

Source: business recorder. 5 October 2013

8th Ship Recycling Conference: Continuing lack of safe ship recycling

Brussels -- On 26th and 27th September, the “8th Annual Ship Recycling Conference” took place, an industry event held in London every year. An array of speakers shared their expertise on clean and safe ship recycling, and presented solutions for ensuring, for instance, proper Inventories of Hazardous Materials (IHM) or safe asbestos removal. Despite the expertise available, the conditions on the ground however have not yet changed substantially and a vast majority of end-of-life vessels are still broken without the necessary precautions for workers and the environment, says NGO Shipbreaking Platform, participating in the conference.

Who`s responsible?

Ship owners, cash buyers or yard owners present at the conference continued blaming each other for the lack of safe and green ship recycling. Ship owners, represented by the German Ship Owners Association and the International Chamber of Shipping, argued that the cash buyers to whom they sell their ships are responsible for choosing a dismantling yard, and that the ship-owning community anyways cannot afford being responsible for clean and safe recycling in times of economic downturn.

Cash buyers claimed similarly that their profit margins would go negative should they have to pay for safe and green recycling. Since they are primarily facilitators or "middle men" helping ship owners to obtain the highest price for their vessels, the cash buyers argued that it should be up to the ship owners to demand green and safe recycling and for the yards to provide green and safe dismantling methods. The Indian yard owners on the other hand blamed the ship owners for not even providing a proper Inventory of Hazardous Materials and complained that investments in better methods did not bring them more business.

Needs to pay for safety

“Everyone who earns money in the shipbreaking business needs to pay his share for making the sector clean and safe,” said Patrizia Heidegger, Executive Director of the NGO Shipbreaking Platform and invited speaker at the Ship Recycling Conference. “The primary responsibility however lies with the ship owners: They economically benefit from their ships over years, they take the decision to sell the vessel for demolition and they dictate the practice used for dismantling by the price they demand for their ship. If ship owners demand clean and safe ship recycling, they can have it”.

The Platform is seriously concerned to hear that ship owners even questioned their responsibility for providing an Inventory of Hazardous Materials. The German Ship Owners Association questioned why the ship recycling yards could not come up with an IHM prior to dismantling the ship instead.

One percent asking for safe and green recycling

"Apart from the fact that a proper IHM localising and quantifying hazardous materials on board allows the recycler to understand what he actually buys, if he can deal with the type and quantity hazardous wastes on board the ship and to offer a price taking into account environmentally sound management of these wastes, an IHM also allows for the safe operation of the vessel and the safety of the seafarers on board during its operational use”, Patrizia Heidegger comments, “this is the very least ship owners can do - and the maritime industry has agreed on the necessity for an IHM years ago”.

Whilst the ship owners expressed unwillingness to reduce their profit margins so that money can be invested in proper safe recycling and hazardous waste management practices, all industry stakeholders seemed confident that the market will provide for gradual improvements of ship recycling practices. Major cash buyer GMS however informed the conference that only a measly on percent of the ship owners ask for safe and green recycling.

Six arguments for an economic incentive

In a panel debate on whether an economic incentive to push ship owners towards green ship recycling is needed, Patrizia Heidegger shared the following six arguments in favour of such a mechanism:

• In the current market situation the additional costs for clean and safe recycling are the bottleneck for real improvements. Only a handful of ship owners are currently willing to reduce the price they obtain for their end-of-life vessel to allow for clean and safe recycling in return. An economic incentive would cover the price difference.
• An economic incentive will ensure implementation of ‘polluter pays’ and the internalisation of costs that are currently being externalised to people and the environment in developing countries.
• An economic incentive will ensure successful implementation of any legislation that seeks to promote safe and green ship recycling, and will prevent the flagging out prior to selling a vessel for dismantling in an attempt to circumvent the law.
• An economic incentive covering all ships calling at EU ports will create a level playing field as a large share of the global fleet is dependent on trade with the EU. Such a mechanism could potentially also be turned into an international instrument.
• A differentiated economic mechanism will in addition implement producer responsibility and encourage green ship design.
• An economic incentive will have an immediate effect on improving shipbreaking practices. This is crucial as it is now and within the coming years that vessels built with toxic materials are and will be decommissioned.

The European Commission (EC) is going to report on the possibilities of an economic instrument at the European level and informed the Conference that they will tender such a study very soon.

Source: recycling portal. 30 September 2013

Fire Damaged Toxic Ship Destined for Recycling on Indian Beach?

Non-Governmental Organisation, Shipbreaking Platform, which campaigns to end environmentally harmful practices at ship breaking yards in South Asia, has called on India, Pakistan, and Bangladesh to halt the import of the fire damaged, ship Hansa Brandenburg.

The container ship caught fire in July and was later towed to Port-Louis in Mauritius.

According to the organisation it is suspected that the German owner of the Leonhardt & Blumberg group, which it presumes to be toxic, has sold the Hansa Brandenburg for breaking in South Asia, most likely to India.

The NGO explained that the Mauritian authorities dealing with hazardous waste confirmed that the ship is still in Port-Louis, but could soon leave as Mauritius refused to deal with the burnt containers and cargo which, it claimed are likely to contain a substantial amount of hazardous materials such as heavy metals or PCBs.

Moreover, Shipbreaking Platform said that the vessel is suspected of carrying dangerous substances in the water used to fight the fire as well as a significant amount of fuels and oil, and that it is therefore concerned that the Hansa Brandenburg, which was not cleaned since the fire, is contaminated with hazardous substances.

Last year, another German-owned container ship, the MSC Flaminia, caught fire and was severely damaged. According to Shipbreaking Platform, the owner of the ship had to clean it in a German port and then send it for repair within the EU.

The NGO called on Leonhardt & Blumberg to make sure that toxic residues left by the fire as well as the hazardous substances in the structure of the ship are handled by a facility which is adequately equipped for the task.

The costs for such an operation must be paid by those responsible, not by the workers and the environment on a beach, the organisation asserted.

“If the ‘Hansa Brandenburg’ is sent to India, this would be another typical case of bad practice where a wealthy shipping company rids itself of its environmental and social responsibility by dumping waste in a substandard yard in South Asia – just because it is more profitable,” said Patrizia Heidegger, executive director of Shipbreaking Platform.

Flying the flag

Shipbreaking Platform claimed that the Hamburg based owner, Leonhardt & Blumberg is already known for its malpractice in dumping old ships in substandard facilities in India.

In 2012, the organisation said that the Hansa India was beached in Alang, India, followed in 2013 by the Hansa Trondheim, the Hansa Stavanger, the Hansa Pacific and the Hansa Atlantic.

This year the NGO noted that Leonhardt & Blumberg changed the flags of all its beached end-of-life vessels to Sierra Leone or Comoros before beaching – a typical sign that the owner used a cash buyer as a middleman and seeks to avoid any legal responsibility.

With about 4000 merchant ships, Germany owns the world’s biggest commercial shipping fleet.

However, according to Shipbreaking Platform, it is also one of the worst dumpers of toxic ships: in 2012, 58 German-owned ships were beached in South Asia, and another 34 have already been sent between January and June 2013. Last year, 365 end-of-life ships owned by European companies were dumped in South Asia.

Leonhardt & Blumberg is claimed to have promised the German Government that at least part of its fleet would again fly the German flag in return for tax incentives under the tonnage tax system.

However, according to Shipbreaking Platform, currently only one of the company’s ships flies a German flag. Reflagging to flags of convenience allows shipowners to circumvent stricter European laws, for instance with regards to workers’ rights or environmental protection.

Under the new European Regulation on Ship Recycling, which will enter into force early in 2014, ships flying the flag of an EU Member State can only be dismantled in a ship recycling facility approved by the European Commission in order to ensure workers’ safety and environmentally sound management of hazardous wastes.

The NGO concluded that if Leonhardt & Blumberg continue to re-flag their vessels to Sierra Leone or the Comoros before scrapping, they will deliberately avoid the new regulation.

Source: waste-management-world. 3 October 2013