24 December 2013

China to raise ship-scrapping subsidy by 50% :

China: China is to increase cash subsidies for scrapping discarded vessels by 50% in order to help cut overcapacity and emissions.

The Chinese government will grant US$ 247 per tonne (Euro 171) for shipping companies to replace vessels, according to an official online statement. The award applies to vessels scrapped in the years 2013 through to 2015.

Under the new programme, ship operators receive half the money on completion of scrapping and the rest after placing new building orders, according to the statement. Under a 2010 rule, they had to complete scrapping and place new ship orders before receiving any of the subsidy. Chinese shipbuilders also stand to benefit from the subsidy hike.

Source: recycling international.  24 December 2013

19 December 2013

European Regulations on Ship Recycling Published:

New laws go into effect on Dec. 30, 2013.

The new European Regulation on ship recycling (Regulation (EU) No 1257/2013) has been published in the Official Journal of the European Union (EU) and it will enter into law on Dec. 30, 2013.

The objective of the regulation is to reduce the negative impacts linked to the recycling of EU-flagged ships, especially in South Asia, without creating unnecessary economic burdens, according to the Journal. It brings into force an early implementation of the requirements of the 2009 Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships, therefore contributing to its global entry into force.

The new Ship Recycling Regulation will apply to large commercial seagoing vessels flying the flag of EU Member State, and to ships flying the flag of the third country calling at EU ports or anchorages. In order to ensure legal clarity and avoid administrative burdens, ships covered by the new legislation would be excluded from the scope of the Waste Shipment Regulation (EC) 1013/2006, according to the new rules.

The regulation sets out a number of requirements for European ships, European ship owners, ship recycling facilities willing to recycle European ships and the relevant competent authorities or administrations. It also requires the EC to adopt a number of acts implementing the regulation (in particular the European List of ship recycling facilities authorized to recycle ships flying the Union flag).

According to the new rules, the installation or use of certain hazardous materials on ships will be prohibited or restricted. These hazardous materials include asbestos, ozone-depleting substances, PCBs (polychlorinated biphenyls), PFOS (perfluorooctane sulfonate) and antifouling compounds and systems.

Each new European ship (or a ship flying a flag of the third country calling at EU port or anchorage) will be required to have on board an inventory of hazardous materials verified by the relevant administration or authority and specifying the location and approximate quantities of those materials.

European ship owners also will have to ensure that ships are only recycled in ship recycling facilities included in the European List. They will have to ensure that each end-of-life ship is prepared for recycling. In order to do this, they will have to provide the necessary information about the ship to the ship recycling facility, notify the intention to recycle the ship to the relevant administration, provide an updated inventory of hazardous materials, and minimize the amount of cargo residues, remaining fuel oil and ship generated wastes remaining on board, according to the new rules. They also will have to provide a ready for recycling certificate to the ship recycling facility which will recycle their ship.

Prior to any recycling of a European ship, a ship recycling plan will have to be developed by the operator of the ship recycling facility based on the information provided by the ship owner. The plan will contain information about the ship essential for its safe and sound treatment and thus will facilitate the work of the ship recycling facility. European ships will undergo surveys verifying compliance of the inventory of hazardous materials with the requirements of the regulation.

EU Member States' port authorities will be authorized to control European ships to verify whether they have on board a ready-for-recycling certificate or a valid inventory of hazardous materials, whatever is relevant.

In order to be included in the European List, any ship recycling facility irrespective of its location will have to comply with a number of requirements. The EC will assess the applications received from the ship recycling facilities located in third countries. For facilities located in the EU Member States, the assessment will be done by national authorities and its result will be provided to the EC.

The European List will be published in the Official Journal of the European Union and on the website of the Commission at the latest 36 months after the date of entry into force of this regulation. The Commission will be able to regularly update the European List in order to include or remove a ship recycling facility from the List.

Source: recycling today. 18 December 2013

ClassNK Issues Compliance for Ship Recycling Facility to Jiangsu Changrong Steel

Leading classification society ClassNK (Chairman and President: Noboru Ueda) has issued a Statement of Compliance (SOC) to Jiangsu Changrong Steel Co. Ltd. (CEO: Yung Wai Ching) in line with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (Hong Kong Convention). This makes Jiangsu Changrong Steel Co. Ltd. the fourth facility in the world to earn such certification in line with the Hong Kong Convention.

Jiangsu Changrong Steel is a ship recycling facility located on the Yangtze River in China’s Jiangsu Province. In order to carry out safer and more environmentally friendly ship recycling, the yard worked closely with nearby ship shipbuilding and repair yard Chengxi Shipyard (Xinrong) Co., Ltd., whose stakeholders include China State Shipbuilding Corporation, and Mitsui & Co., to support the expansion and improvement of its recycling facilities.

Under the Hong Kong Convention, ship recycling facilities must submit a Ship Recycling Facility Plan (SRFP) showing that the ship recycling methods being implemented at the facility are safe and environmentally sound to relevant authorities. Jiangsu Changrong Steel began developing its SRFP earlier this year, and turned to ClassNK to certify its SRFP contents prior to the expected adoption of the new convention.  Working as a third-party certification body, ClassNK auditors carried out a thorough investigation of the facility and the contents of its SRFP before issuing Statement of Compliance certifying the facilities and procedures were fully in accordance with the Hong Kong Convention requirements.

With this certification, Jiangsu Changrong Steel becomes the fourth recycling facility in the world to be certified in accordance with the Hong Kong Convention, following Jiangmen Zhongxin Shipbreaking & Steel Co., Ltd (Guangdong, China) in December 2012, Dalian Shipbuilding Industry Marine Service Co., Ltd (Liaoning, China) in September 2013, and Miyaji Salvage (Kagawa, Japan) in December 2013. All four ship recycling facilities have been certified by ClassNK.

Source: maritime executive. 18 December 2013

Third Chinese shipbreaker certified under Hong Kong Convention

Jiangsu Changrong Steel has become the fourth ship recycling facility in the world to earn Hong Kong Convention certification, after ClassNK issued a Statement of Compliance.

The facility, located on the Yangtze River in China’s Jiangsu Province, was found to be compliant with Hong Kong Convention stipulations that its recycling methods be both safe and environmentally sound, after ClassNK auditors carried out a thorough investigation of the facility and the contents of its Ship Recycling Facility Plan (SRFP).

Now Hong Kong certified, Jiangsu Changrong joins two other Chinese yards, Jiangmen Zhongxin Shipbreaking & Steel in Guangdong, certified December 2012, and Dalian Shipbuilding Industry Marine Service in Liaoning, certified September 2013, as well as Japan’s Miyaji Salvage in Kagawa, certified December 2013. All four ship recycling facilities have been certified by ClassNK.

Source: sea trade global. 19 December 2013

Shipbreaker call on the EU for a financial incentive for end-of-life ships:

Brussels -- On Thursday 5 December, just five days before the new EU Ship Recycling Regulation was published, ship recyclers from Germany, France, the UK, the Netherlands, Denmark, Lithuania, Spain and Sweden participated to the first green ship recycling conference organised by the NGO Shipbreaking Platform to discuss the future of their industry.

(Part of) campaign poster  

The Regulation, published on 10 December, is set to enter into force on 30 December and will be fully applicable some time between 2015 and 2019. Especially, implications of the new EU Ship Recycling Regulation were discussed, including the opportunities that would be provided by a financial incentive pushing ship owners towards clean and safe ship recycling facilities, and to what extent Guidance Notes on the new requirements for ship recycling facilities is needed.

A further incentive to flag out

During the meeting, the ship recyclers and the Platform met with a representative of the European Commission and expressed their disappointment with the new Regulation which only covers the clean and safe recycling of EU-flagged ships. Most end-of-life vessels are registered under non-EU flags and it is expected that the new Regulation will provide a further incentive to flag out.

“European ship recyclers exist and are willing to take in a much larger share of the global end-of-life fleet,” said Ingvild Jenssen, policy advisor of the NGO Shipbreaking Platform. “For years the shipping industry and European Commission have been repeating that there is not enough clean and safe ship recycling capacity in Europe, and that ship owners have no choice but to sell their end-of-life vessels to dangerous beach-breaking yards in South Asia. We demonstrated with this meeting that this is only because there has been no political will to recognise and support the industry in Europe.”

No competition without EU support

Facilities around the world that satisfy a list of requirements outlined by the new Regulation will be approved and listed by the European Commission. EU flagged end-of-life ships will only be allowed to use these facilities. European ship recyclers will have to compete with facilities worldwide, and without EU support, they fear they will be unable to do so. Without a financial incentive to encourage ship owners to opt for better ship recycling in the EU, European ship recyclers expressed that they would not be able to attract more business.

“We have been calling on the EU to come up with a financial incentive to support green and safe ship recycling for years,” said Ingvild Jenssen. “Without such a mechanism, ship owners will find ways to circumvent the Regulation and continue to send their ships to substandard yards where workers’ lives are put at risk and the environment is severely polluted.”

Source: recycling portal.

18 December 2013

EU disappointed by new Ship Recycling Regulation:

Eight European countries have expressed their disappointment at the new EU Ship Recycling Regulation set to enter into force later this month.

Germany, France, the UK, the Netherlands, Denmark, Lithuania, Spain and Sweden met to discuss the future of their industry at the first green ship recycling conference organised by the NGO Shipbreaking Platform.

During the meeting, the ship recyclers and the NGO said they were disappointed with the new Regulation, which only covers the clean and safe recycling of EU-flagged ships. Most end-of-life vessels are registered under non-EU flags and it is expected that the new Regulation will provide a further incentive to flag out.

Ingvild Jenssen, policy advisor, NGO Shipbreaking Platform, said: “European ship recyclers exist and are willing to take in a much larger share of the global end-of-life fleet.”

“For years the shipping industry and European Commission have been repeating that there is not enough clean and safe ship recycling capacity in Europe, and that ship owners have no choice but to sell their end-of-life vessels to dangerous beach-breaking yards in South Asia,” she added.

Facilities around the world that satisfy a list of requirements outlined by the new Regulation will be approved and listed by the European Commission. EU flagged end-of-life ships will only be allowed to use these facilities.

The EU countries say they fear they may not be able to compete with recycling facilities worldwide without EU support and will not be able to attract more business for ship recycling without a financial incentive.

The new Regulation will be fully applicable sometime between 2015 and 2019.

Source: maritime journal.  17 December 2013
http://www.maritimejournal.com/news101/industry-news/eu-disappointed-by-new-ship-recycling-regulation

Platform News – European Ship Recyclers Call on the EU for a Financial Incentive for End-of-Life Ships

December 2013 – On Thursday 5 December, just five days before the new EU Ship Recycling Regulation was published, ship recyclers from Germany, France, the UK, the Netherlands, Denmark, Lithuania, Spain and Sweden participated to the first green ship recycling conference organised by the NGO Shipbreaking Platform to discuss the future of their industry.


The Regulation, published on 10 December, is set to enter into force on 30 December and will be fully applicable some time between 2015 and 2019.

Especially, implications of the new EU Ship Recycling Regulation were discussed, including the opportunities that would be provided by a financial incentive pushing ship owners towards clean and safe ship recycling facilities, and to what extent Guidance Notes on the new requirements for ship recycling facilities is needed.

During the meeting, the ship recyclers and the Platform met with a representative of the European Commission and expressed their disappointment with the new Regulation which only covers the clean and safe recycling of EU-flagged ships. Most end-of-life vessels are registered under non-EU flags and it is expected that the new Regulation will provide a further incentive to flag out.

“European ship recyclers exist and are willing to take in a much larger share of the global end-of-life fleet,” said Ingvild Jenssen, policy advisor of the NGO Shipbreaking Platform. “For years the shipping industry and European Commission have been repeating that there is not enough clean and safe ship recycling capacity in Europe, and that ship owners have no choice but to sell their end-of-life vessels to dangerous beach-breaking yards in South Asia. We demonstrated with this meeting that this is only because there has been no political will to recognise and support the industry in Europe.”

Facilities around the world that satisfy a list of requirements outlined by the new Regulation will be approved and listed by the European Commission. EU flagged end-of-life ships will only be allowed to use these facilities. European ship recyclers will have to compete with facilities worldwide, and without EU support, they fear they will be unable to do so. Without a financial incentive to encourage ship owners to opt for better ship recycling in the EU, European ship recyclers expressed that they would not be able to attract more business.

“We have been calling on the EU to come up with a financial incentive to support green and safe ship recycling for years,” said Ingvild Jenssen. “Without such a mechanism, ship owners will find ways to circumvent the Regulation and continue to send their ships to substandard yards where workers’ lives are put at risk and the environment is severely polluted.”

NOTES
For more information, please visit our European campaign page: http://www.shipbreakingplatform.org/european-campaign/

CONTACT
Ingvild Jenssen
Policy Advisor
NGO Shipbreaking Platform
+32 2 6094 420

Source: NGO shipbreaking platform. 17 December 2013

Indian shipbreakers suffer due to higher vessel prices:

India: Activity has slowed at India's shipbreaking yards now that higher prices for older ships are making owners less willing to scrap them, according to London-based Clarkson Research Services.

The analyst has warned of a risk of speculative purchases by cash buyers banking on a market hike in the coming weeks. 'It is presently a very tough market to call, with each unit requiring an individual valuation which takes account of many differing factors,' it stresses.

Pakistan-based buyers have been increasingly active in recent weeks, offering strong rates to snatch large tonnages from their Indian and Bangladeshi rivals. However, recent currency fluctuations have also created uncertainty among Pakistan's Gadani yards, according to Lloyd's List.

Prominent recent sales into Pakistan include the 1994-built Suezmax tanker 'Nikator', operated by Cavodoro Shipping, which was reportedly sold for US$ 12 million (Euro 8.7 million). However, GMS says some Chittagong yards in Bangladesh are anticipating continued improvement in local steel plate prices and have begun to stockpile vessels.

Source: recycling international.  17 December 2013

GMS weekly report on Bangladesh ship breaking industry for WEEK 50 of 2013:

The political situation worsened in Bangladesh this week, with the much-publicized hanging of the Islamic opposition party leader. A number of people have already died in the fierce clashes between both sides that has seen the country ground to a virtual standstill amidst continued strikes and blockades.

Indeed, so turbulent is the domestic situation that the scheduled elections of January 5th have been called into question and may even have to be postponed as a result.

Notwithstanding, certain end buyers seem determined to take advantage and remained of the belief that as long as things remain volatile in the country, the price of commodities such as steel can only be set to improve. For the right units therefore (larger LDT containers, bulkers and tankers), buyers are emerging at ever more bullish numbers as demand and capacity remains good.

Source: steel guru. 17 December 2013

GMS weekly report on Indian ship breaking industry for WEEK 50 of 2013:

A bumper week on the sales front saw the Indian market bag four high profile and high LDT containers at some impressive numbers. Much of this appeared to be on the back of cash buyer speculation, as the truckers strike that had beset the market at the end of last week persisted for most of this week as well, leaving any reading of steel prices redundant.

The currency has begun to settle again in and around Rs. 61 to the USD (with some even speculating it could go down into the 50s) as local fundamentals showed signs of improving. A brief spike on the steel prices was also seen at the end of the week as the truckers strike came to an end and business resumed as normal in Alang.

The container vessels in question saw the DATO (17,600 LDT), KADIK (23,857 LDT) and PATAI (19,631 LDT) all sold to one bullish cash buyer for USD 444/LT LDT for a delivery WC India. It is understood that the same cash buyer also purchased the APL SPINEL (21,574 LDT) for an incredible USD 454/LT LDT ‘as is’ Singapore with 650 T bunkers remaining on board at the time of delivery. Owing to less than impressive (barely breakeven) charter levels, containers certainly appear to be the flavor of the moment.

The other sale for the week saw the Nasco controlled tween XIANG FU MEN (8,190 LDT) sold for a decent USD 420/LT LDT (with inward clearance fees for buyers), as owners continued their clearout of older tonnage.

Source: steel guru. 17 December 2013

GMS weekly report on China ship breaking industry for WEEK 50 of 3013:

The big news of the week concerned Monday’s announcement of the government subsidies due on any Chinese flagged tonnage sold into Chinese recycling yards this year.

Under the new scheme, State owners with Chinese flagged vessels will be due a premium equivalent to USD 124/GRT on any vessels sold to locally approved yards (from this year) until 2015. A USD 124/GRT discount will also be available should those same owners, who have scrapped, choose to invest in a newbuilding units from a Chinese yard.

This stimulus package has seen some of the major Chinese players scrap vessels well into double digits this year, without even considering the sub-continent option. This has perhaps contributed to the lower overall pricing of Chinese yards, since demand has decreased owing to the number of well-priced vessels available from local owners.

A number of scrap yards have already been approved for the scheme (the deals will be done direct between owners and yard without the involvement of cash buyers or brokers) along with a number of smaller local currency led yards based in the Fujian area.

Source: steel guru. 17 December 2013

GMS weekly report on ship breaking industry for WEEK 50 of 2013:

Interestingly this week, strikes in both India and Bangladesh saw cash buyer (and end buyer) speculation re-enter the market once again. The political unrest in Bangladesh and the truckers strike in India have led certain parties to start gambling on an increase in commodity prices, something that usually seems to occur in times of crisis.

Currencies in both Pakistan and India also began to settle (though daily variations continue to leave end buyer nerves frayed to an extent) and appeared to present an overall rosier picture in the Indian sub-continent recycling markets this week.

A glut of heavy LDT container vessels was also concluded into India this week as this particular sector displayed few signs of satisfying owners on the hire rates. The winter period however, has brought with it, an improvement in rates for many other types of vessels something that may see supply slow going into the New Year.

The Chinese government announced this week, the much-anticipated subsidies due to owners of Chinese flagged ships who have scrapped locally this year. The generous premiums will see mostly the largest state run benefactors obtain prices well above what they may have even seen, had they scrapped their vessels in the sub-continent.

This is a significant development and may explain why Chinese yards have been so subdued for the last few quarters of this year. Local yards have seen a steady and decent supply of vessels from the likes of Cosco and China Shipping, which has led to a reduced appetite / overall capacity. There is also a general lack of interest to compete on some of the costlier international tonnage, particularly when cash buyers often look at buying ‘as is where is’ for a final voyage across to the sub-continent.

Source: steel guru. 17 December 2013

GMS weekly report on Pakistan ship breaking industry for WEEK 50 of 2013:

Gadani buyers could only look on in astonishment as India and Bangladesh snared their share of market and private vessels from under their noses. Attempts to be competitive on the pricing-front appear to have fallen flat again, with their competitors pushing the price on once more.

The Pakistani currency made some promising signs of a recovery back down to PKR 107 levels to the USD (having previously been trading in and around 109 as of last week), and certainly demand remains healthy (despite several VLCC sales being reported in the past month or so).

However, with freight rates improving over these winter months and Pakistan buyers showing a tendency not to take containers or other heavy draft vessels, unless Gadani buyers show a willingness to improve and compete on the market tonnage, it may well be a bleak end to 2013.

Source: steel guru. 17 December 2013

‘Don’t sell INS Vikrant as scrap metal, turn it into a museum’:

A public interest litigation (PIL) Monday sought before the Bombay High Court that India's first indigenous aircraft carrier INS Vikrant be converted into a national museum instead of being sold as scrap metal. The PIL also sought quashing and setting aside of the tender issued by the Centre for scrapping the historical ship. The court has directed all the respondents to file a reply by January 8.

A Division Bench of Chief Justice Mohit Shah and Justice M S Sanklecha was hearing the PIL filed by activist Kiran Paigankar as a convener of INS Vikrant Bachao Movement.

Advocate Shekhar Jagtap, appearing for the petitioner, informed the court that INS Vikrant played a vital role in protecting the sea borders of India during the war against Pakistan in 1971. The ship has received two Paramveer Chakras and several civilian awards, he told the court.

Citing the Antiquities And Art Treasures Act, 1972 Jagtap also pleaded that INS Vikrant could get the status of "antiquity" if preserved and not scrapped.

The PIL states that the Centre had issued a disposal policy for warships and submarines dated August 19, 2010, whereby the decommissioned ships and submarines could be disposed either by scrapping or by converting into a museum. Jagtap, therefore, pleaded before the court that the Centre, Indian Coast Guard and the Western Naval Command be directed to convert the legendary ship into a museum for training and recreational purposes.

The lawyer representing the Ministry of Defence informed the court that it had recently received a proposal submitted by Maharashtra Maritime Board for conversion of INS Vikrant into a museum, and the same was under consideration. The lawyer also said that a decision was likely by January 29.

The court directed all the respondents, including the Naval department, Urban Development Department and Department of Tourism and Culture to file their affidavits by January 8. The next date of hearing of the case is January 16

Source:  Indian express.  17 December 2013

16 December 2013

An examination of the waste movement regime’s applicability to vessels destined for scrapping and potential improvements made in the IMO Draft Convention on Ship Recycling

Abstract:

The scrapping of ocean-going vessels is currently done mainly in a few states in Asia. Because of the hazardous materials contained in the ships, the scrapping poses a significant danger to both the workers in the shipbreaking yards as well as to the environment. The international community has been aware of the problems related with shipbreaking for over a decade, and has in different ways tried to improve the practices. Moreover, attention has turned to the regime governing the movement of waste, as it has been argued that a vessel destined for scrapping should be defined as waste under the regime. The waste movement regime contains provisions that control and restrict the transboundary movement of waste. Applying the regime could thus hinder vessels containing hazardous materials from being scrapped in Asia. This thesis examines how the shipbreaking industry functions, what considerations are made before selling a ship for scrapping, and where and how the scrapping is done. Furthermore, the study provides an overview of actions taken so far by different stakeholders that are trying to solve the problems connected with shipbreaking. The main attention is, however, paid to the regulations governing the movement of waste and how the regulations can be applied to vessels destined for scrapping. It is argued that although the waste movement regime can be applied to vessels, the enforcement of the regulation contains some major weaknesses. These weaknesses result in the regime not being effective at solving the problems related with the scrapping of vessels. Finally, the thesis examines the IMO Draft Convention on ship recycling. The Convention is currently being negotiated with the intention to adopt it in May 2009. The procedures laid down by the regulation are explained and some issues that remain unsolved are presented. This is accompanied by some critique of the Convention that has been put forward by environmental non-governmental organisations (NGOs). In the light of the critique from the NGOs and the earlier discussed weaknesses of the waste movement regime, the draft Convention is assessed. The conclusion is that although the draft Convention contains clear improvements of the present situation concerning the scrapping of vessels, the enforcement of the Convention still leaves room for some questions. Moreover, the draft Convention does not fully succeed to allocate the costs caused by shipbreaking in a manner that is in accordance with principles of international environmental law.

Conclusions:

Shipbreaking is a complex and a multi-faceted issue. The subject has attracted the interest of several organisations but it does not fall under one single competence. Thus, the ILO, the IMO and the parties to the Basel Convention, all have legitimate interests to consider the practice of shipbreaking. In view of the current shipbreaking procedures, it is also evident that actions are necessary in order to restrict the severe harms currently caused by the scrapping of vessels. In this study it has been shown that the present waste movement regime can be applied to ships destined for scrapping. In many ways, it is not far-fetched to consider a vessel destined for scrapping as waste, in the same manner as a car, a computer or other commodities are considered waste when they are intended to be discarded. Nevertheless, ocean-going vessels destined for scrapping are at the same time very different, although they fulfil the requirements that define waste. Vessels are large constructions with a relatively long life-length and they are able to operate around the world, sometimes far from where they were constructed. Because of these factors, ships destined for scrapping can hardly be accommodated within procedures established by the waste movement regime. Moreover, the enforcement of the waste movement regime to ships destined for scrapping is problematic. In order to define a vessel as waste, an intention to scrap the ship must be established. As has been shown in this study, this is often a rather difficult, if not impossible, task. Furthermore, a movable vessel can escape enforcement relatively easily if the shipowner hides the intention to scrap the ship until it is out on safe waters. Finally, the enforcement of the waste movement regime is also weakened by the fact that the applicability of the Basel Convention to ships destined for scrapping is disputed.

In this thesis it has been argued that the IMO draft Convention is in many ways an improvement compared with the waste movement regime. The draft Convention takes notice of the special features of ocean-going vessels and creates a global and binding regulation exclusively focused on the life of a vessel from its construction until it has been scrapped. It requires inventories of hazardous materials for all ships, supports green construction of vessels and requires the authorisation of shipbreaking facilities. These are all good measures aiming at solving the problems related with the scrapping of vessels. As has been argued in this study, the draft Convention does, however, contain some weaknesses. The present emphasis laid on flag state enforcement, with a restricted possibility for other states to detect and enforce violations, raises concern whether the provisions of the draft Convention will be followed in practice. The emphasis on flag state enforcement is also problematic, considering how easily shipowners can change the flag of their vessels. These problems, nonetheless, concerns generally all maritime legislation and are hard to overcome. The enforcement of the draft Convention is, ultimately, better constructed to the circumstances that apply to end-of-life vessels, than the rules on jurisdiction in the waste movement regime, which are based on the notion of “exporting state” and the belief that waste is produced at one location. Moreover, the study has argued that the allocation of responsibility in the draft Convention is insufficient and does not incorporate the polluter pays principle. At present, the draft Convention puts the burden of responsibility for the scrapping of vessels on the shipbreaking state and the port state. Arguably, these stakeholders are not in the best position to carry the bulk of the costs that implementing the rules of the draft Convention will demand. What is more, the shipowners, which are the ones profiting from the vessels during their lifetimes, can escape bearing the pollution costs that the scrapping of the vessels causes. These costs are instead placed on the shipbreaking states, which are in most cases developing states. This is contradictory to the polluter pays principle and does not represent a fair allocation of the costs for the scrapping of vessels. Finally, it remains to be seen how the dissimilarities between the draft Convention and the existing waste movement regime will be solved. This especially concerns the pre-cleaning of vessels, which as has been show is currently a requirement explicitly stated in the EU Regulation on shipments of waste. Although being a valid requirement for the protection of the environment, the pre-cleaning of vessels before scrapping has to be deemed impossible under the current circumstances. The European Commission appears, however, not to be prepared to change the EU Regulation. Nevertheless, having two regulations applicable to vessels destined for scrapping is not a satisfactory solution and could possibly lead to out-flagging of vessels from the EU.

Reflections:

It will still most likely take several years before the draft Convention enters into force even if the Convention is adopted as planned in May 2009. A fast and widespread ratification would be necessary to meet the increased need of scrapping that is expected in the following years. In order to facilitate a fast entry into force of the Convention, it may therefore be necessary to compromise on the issues that are currently debated and to make some of the requirements in the Convention softer. This regards, for instance, the pre-cleaning of vessels, at what moment the inventory of hazardous wastes must be established and when surveys must be undertaken.

It appears that restricting vessels from being scrapped in Asia is neither a practical nor a sustainable solution. What is instead needed is to improve the standards of the scrapping facilities in the current shipbreaking states. As has been showed, the draft Convention does contain provision that focus on improving the scrapping procedures. This is a positive development, but what is moreover needed is financial support to the shipbreaking states in order for them to improve the standards. Otherwise there is a risk that the provisions of the draft Convention will not have a real impact. In view of this, the shipping industry should be demanded to bear a share of the costs that improving the facilities would require. This would more fairly allocate the costs of pollution which are connected to the scrapping of vessels, and also implement the polluter pays principle into the present shipbreaking practices.

Author: Oskar Sundelin
Master’s Thesis for the Master of Law Programme
Department of Law School of Business, Economics and Law University of Gothenburg
Spring 2008

Source link:

Shipbreaking in Pakistan: jurisdiction issue hampers sale tax collection

An issue of jurisdiction between Inland Revenue officials of Karachi and Quetta to deal with the sales tax matters of the ship breaking industry is hampering sales tax collection from ship breakers. Sources told Business Recorder here on Saturday that Regional Tax Office-III (RTO) Karachi has approached the Federal Board of Revenue (FBR) against transfer shipbreakers cases'' from Karachi to Quetta for sales tax collection, as head offices of many ship-breaking companies are at Karachi and transfer of jurisdiction to result in legal complications.

The Chief Commissioner Inland Revenue RTO-III Karachi has informed FBR about the revenue potential of the shipbreaking sector and hindrances in its realisation. According to the Chief Commissioner, CIR/Z-IV of the RTO-III Karachi has been dealing with the shipbreaking sector for about 7 months and has an in-depth knowledge of the issues relating to the sector. Additionally, concerned Commissioner also has an excellent command over the laws and procedures relating to the assessment of such cases and is well-versed with the legal issues being faced in cases pertaining to the sector before appellate foras. Transferring of shipbreakers'' cases to Quetta at this point would result in loss in terms of compromise on the quality of assessment of the subject cases. Another important factor is that head offices of majority of ship-breaking concerns are at Karachi and transfer of jurisdiction will result in hardship for these concerns in terms of change of contact point for assessment and allied issues.

Recently, Commissioner IR ZONE-IV RTO-III Karachi has informed FBR that the official is dealing with this sector for the last seven months now and has studied its various aspects. Though the number of total cases in the sector is not more than 45, its revenue potential, if realised to the maximum, can be much higher than a number of other bigger sectors. However, this potential is not being realised to the full because of certain issues.

Referring to the issue of jurisdiction, sources said that the jurisdiction over the ship breaking sector was assigned to Zone-IV, RTO-III, Karachi vide FBR''s Notification No 57(2)/jurisdiction-2011/103739-R, dated 30/6/2012 and remained with Zone-IV in latest jurisdiction order, as under: "..All individuals, corporate or non-corporate persons or classes of persons of the following sectors whose place of business is situated in the areas falling within the limits of former Civil Division of Karachi: ship breaking".

At present there are around 41 to 45 cases of shipbreakers as per details obtained from the Pakistan Ship Breakers Association. Two of these cases have the status of Company and the rest are AoPs and Individual. Out of these, only 13 cases are registered in RTO-III, Karachi. Most of the remaining cases are registered in RTO-Quetta, whereas others are registered in RTO-II, Karachi, and a few others at RTO-I, Karachi, RTO Hyderabad, and one odd at RTO Lahore. Though there seems little justification for ship breakers, operating at Gadani, to get registered at stations like Lahore, their registration at RTO Quetta is understandable because mostly their business activity is at Gadani, Balochistan, whereas jurisdiction of Zone-IV, RTO-III, Karachi, is restricted to the limits of Civil Division, Karachi. Gadani, a sub-division of District Lasbella, Balochistan, is in the territorial jurisdiction of Commissioner Zone-II, RTO Quetta.

Source: business recorder. 15 December 2013

15 December 2013

Dry bulk shippers scrap fewer vessels due to improved fundamentals:

Scrapping level and shipping rates

One indicator that analysts use to formulate supply growth projections is the number of ships retired. But while scrapping activity does limit supply growth and reduce rates, it’s best used for short-term assessment.

This is because the rate at which companies scrap ships often reveals whether the dry bulk shipping industry is facing excess capacity and depressed rates. When excess capacity pressures profits, firms will often retire older ships to relieve pressure on shipping rates and maintenance costs.

Deliveries and Scrapping

Companies scrap fewer vessels

During the first 9 months of this year, we’ve seen positive momentum in scrapping activity. While scrapping activity stood above 3 million dwt (deadweight tonnage) per month at the beginning of the year, it has fallen below 2 million dwt a month. Elevated levels of scrapping activity—such as the levels seen throughout the first half of 2011, the end of 2008 to early 2009, and most of 2012—have historically coincided with falling shipping rates.

Lower scrappage is positive

Companies and analysts 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.

New ship deliveries falling

At the same time that scrapping activity is falling, new ship deliveries have also fallen. Approximately just under 4 million dwt of vessels entered the industry in August and September. While still elevated compared to pre-2009 levels, this is an improvement. Lower scrapping activity and lower new ship deliveries are both 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.

Source: market realist.

14 December 2013

Investigating the Sustainability of the Ship-Recycling Industry in Bangladesh

Researcher(s): Audrey Mayer, S. M. Mizanur Rahman
Institution: Michigan Technological University

Sustainable Ship-Recycling in Bangladesh

This project will improve the sustainability of the ship-recycling industry in Bangladesh, where millions of tons of metal are recovered from hundreds of beached container ships, oil tankers, and cruise liners annually. We will investigate how recycled metal flows through the metal smith community in Dhaka, and identify improvements that reduce environmental impacts and maintain social networks.

Why This Project Is Important

Every year, thousands of container ships, oil tankers, and cruise liners are beached on the shores of India, Pakistan, and Bangladesh to be broken down and recycled. In Bangladesh alone, the beaching of hundreds of massive ships contributes over 70% of the country’s metal resources, but contaminates the environment and food resources with heavy metals, oil, and asbestos. The magnitude of the flow of used ships to these coastlines illustrates the global scale of humanity's consumption of oil and resources, and its consequences for the poorest among us. While the metal from the ships represents a critical resource for a growing population in Bangladesh, the manner in which these ships are dismantled (by hand with ropes and blow torches) is damaging to people's health and their environment. Our project will use theories from a field called "industrial ecology" to try to improve the economic, social, and environmental dynamics of this ship-recycling industry, to ensure that it is truly sustainable.

Project Description

There are about 200-300 ships beached in the Chittagong (Bangladesh) ship breaking yards each year, providing around 1.5 million tons of scrap ferrous metal, more than 70% of the country’s steel demand. Over 20,000 people work as day laborers in the industry, at over 10,000 small and medium business engaged in processing these metals into final products. Bangladesh is assumed to be second largest country, after India, in the world that rips the ships apart. Despite these dynamics, few studies have investigated the social aspects of the industry, and no study has tracked the material flow of the industry across the country.

Scrap metals from the ship-breaking industry in Bangladesh are drawn from Chittagong (where the retired ships are beached) to a community in the capital city Dhaka, five hundred miles away from Chittagong, for further processing. We hypothesize that the relationships among the members of the Dhaka community (and between Dhaka and Chittagong) dictates resource flows. Based on previous studies, we know that metal-working skill, familial and social ties, and long-term reciprocal business relationships can restrain an individual’s competitive mentality and encourage cooperation, and hence resource sharing.

This study will focus on two issues; tracking scrap ferrous metal flows and analyzing the community’s social relations with respect to those resource flows. We will conduct this research by interviewing two groups of people: metal resource contractors of the ship breaking industry (the people who move the metal from the ship breaking yards to the metal workers), and metal working business owners in the Dhaka community (the people who turn the scrap metal into products such as rebar for building construction).

We are expecting to conduct about fifty interviews, each of which may last for about an hour. Our questions will largely focus on the level of family ties among businesses, level of reciprocity, resource processing and collection methods, etc. Interviews will be conducted in the local Bangla language. They will be recorded, transcribed, coded, and then analyzed using qualitative and quantitative methods to understand the level of social relations and cooperation involved and the extent responsible for metal flow direction. We will also interview people who either control the purchase of ships or the distribution of metal recovered from the ships into the metal smith communities. We will trace the amount of metal they distribute by weights and by element on an annual basis. To understand the distribution of metals beyond these key informants, we will largely depend on the intermediaries of those who maintain contacts and orders with both the ship-breaking contractors and the small and medium firm owners of metals recycling businesses. Those people will be identified through interviews of community business people and metal contractors. Finally, we expect to contact local and regional government officials and statistical officials to find data that is relevant to the metal distribution, as well as relevant laws and programs for the industry.

Source: http://www.superiorideas.org/projects/Ship-Recycling

UNEP Feasibility study on alternatives to the beaching method of ship recycling: Questions and Answers

Questions and Answers during the webinars on “Feasibility study on alternatives to the beaching method of ship recycling”. 08 and 10 October 2013

Q. During the feasibility study did you consult with the ship recycling facility owners in India? If yes, what was their reaction to the outcome of the study? Was there any positive feedback on their interest for planning an investment to improve their recycling processes, as foreseen in the study?

A. We tried to consult with the ship recyclers in South Asia during the course of the study. While conducting it, we experienced some reluctance as well as interest in how this could be done. But up to this point, we have not received any definitive feedback from ship breakers.

Some ship recyclers are more progressive and foresee, particularly in light of the European regulation that has been developed, that a more forward-looking policy has to be adopted in Asia, too. Of course we know that there are ship recyclers in many countries who, if they can’t conduct the industry on the beach, will not be willing to advance towards alternative facilities, but I do believe that there are some companies considering the matter. This study is particularly aimed at those companies. Unfortunately until now, there was not a lot of feedback from ship recyclers. Although over the years I’ve worked in the industry I noticed interest in this subject matter.

Q. We recently learnt of one project in the Indian state of Gujarat where a company has applied to get a permit to create a new ship recycling facility in the Mundra port area. This would be the first Indian facility using different ship breaking methods (i.e. other than beaching). I was wondering if you know about this project. (I am not referring to another project related to a dry dock)

A. The secretariat didn’t identify any project of this type during the study. But it would be important to disseminate information on such experience.

Q. Are there certification schemes for ship recycling yards that are complying with labour and environment standards apart from the ISO 14000 series?

A. Quite correctly, focusing on the Asian region, for example, ship recycling companies do seek to be ISO 9000 and 14000 compliant. In each location, there are facilities compliant with those standards. There is also another standard that has been developed and that is directly related to ship recycling. This is the ISO 30000 series, specifically a management standard which was developed to assist ship recycling facilities in implementing procedures to ensure environmental, safety, health, and labour standards so as to comply with national and international regulations.

Q. What more can you tell us about the Chang Jiang shipbreaking site in China?

A. The yard is located at Jiangyin city, near a town called Wuxi, a few hours west of Shanghai on the Yangtze River. This is the yard that a renowned shipping company partnered with to carry out improvements so that they could send their ships to be recycled in an environmentally sound manner.

Q. In terms of hazardous wastes, of potentially recyclable materials and scraps, do you know if studies were carried out and are available on which parts can be recycled in ships? Is there a material flow analysis of certain ship types available that may be suitable for planning and upgrading standards?

A. You will find a general analysis in a World Bank study available at: http://documents.worldbank.org/curated/en/2010/12/13695952/ship-breaking-recycling-industry-bangladesh-pakistan. On the basis of the inventories of hazardous materials that were made available for the study, this study contains these estimations on certain types of ships. General information on hazardous liquids and parts containing hazardous substances is also included in the Basel Convention Technical Guidelines for the Environmentally Sound Management of the Full and Partial Dismantling of Ships available at: http://www.basel.int/Portals/4/Basel%20Convention/docs/meetings/sbc/workdoc/techgships-e.pdf.  This information may also be available in publications or web sites of shipping companies or classification societies. In addition, a project that the Basel, Rotterdam and Stockholm conventions are conducting, and that should be starting within the next following months, will develop inventories of hazardous wastes in the Gadani - Hub area of Pakistan, as well as in the Chittagong region of Bangladesh, places where ship recycling and other industrial activities take place in these countries and that may produce hazardous wastes. The inventories to be developed are more localized and, clearly, most of the information will come from the ship recycling yards and from inventories of hazardous materials comprised in the ship. The objective of this study is to assist these countries in developing the requisite hazardous wastes management infrastructure which is, at the moment, is completely lacking.

Q. Referring to the abovementioned project, is this mentioned on the Basel Convention homepage? On the ship dismantling web page, next to the feasibility study, there is a paragraph on this project, but not much information is yet available.

A. On the Basel Convention website, the path to the mentioned project is: Implementation/Ship Dismantling/Capacity Building. This project has not yet commenced in earnest thus there is limited information available at this time. The project should start in the next month or two.

Q. Have you identified investors and do you think there is a willingness from countries or private donors to upgrade ship recycling facilities, according to the feasibility study?

A. We did not look into investors but they could basically be development banks, banks with interest in ship recycling. There is a clear interest to upgrade ship recycling facilities in some Asian Countries such as Pakistan, India and the Philippines - a country where, for the moment, domestic ships are recycled using slipway methods, but where there may be interest in future to accept vessels from other countries.

Q. When the ships get to the ports to be dismantled is there, in the Basel or Hong Kong Conventions, a requirement to have a lab test and make an inventory of hazardous chemicals, their qualification and their concentration?

A. The Hong Kong Convention is probably the most relevant in this area even though it has not yet entered into force. The guidelines for the development of the inventory of hazardous materials, developed under the framework of this convention, do talk about sampling of hazardous substances on board. The Convention requires that an inventory of the ships’ hazardous materials be made. It is left to the local administration to develop procedures to assert that this be done. In Bangladesh for example, following the ship building, breaking and recycling rule of 2011, they have developed procedures where personnel go on board and check whether the inventories are accurate. The Basel Convention Guidelines also provide information in this regard, and can be accessed through the Basel Convention website at: http://www.basel.int/Portals/4/Basel%20Convention/docs/meetings/sbc/workdoc/techgships-e.pdf. Of course, under the Basel Convention, the competent authorities may choose to undertake a sampling of the shipment if there is a question as to whether it matches what is indicated in the movement document. This can be particularly important if a ship is to be repatriated for example.

Q. This question is addressed, in particular, to a participant from a university, which is involved in a ship dismantling project with the Chinese Government. Can you tell us more about your project?

A. This project is funded by the European Commission, in the framework of a bilateral program that runs between the European Union and China called “the Environmental Sustainability Programme”. This is a three-year project that started at the beginning of August 2013. The kick-off meeting for the project will take place in Beijing, in October 2013. The basic idea of the project is to review environmental hazards to increase the recovery of recyclable materials and to include occupational health and safety issues in the current practices. One important module we have included aims, on one hand, to carry out a material flow analysis on certain ship types, on the other hand, to implement a third party inspection system. As shown in the presentation, this is closely related to the topic of how ship owners try to identify potentially certified ship recycling yards. With that third party inspection system developed, including indicators, the project aims to create a Chinese internal certifying system for these existing yards, in order to improve the competitiveness of the Chinese ship recycling sector. Some project components will conduct research on indicators that could make more visible potential improvements in the ship recycling process at the yards. The indicators will form the basis of a sustainability assessment which is also part of the project. The project also includes a policy dialogue module. This will be based on the whole project outcome, through this module we would like to open a dialogue on some national regulations/standards that may or would be implemented in China, in the future.

Q. A follow-up question: Will you implement the project in cooperation with the Chinese government and the ship recycling association in China?

A. Besides the ministry, the project will be implemented in cooperation with the ship recycling association as an associate partner. The project also aims to establish a China ship recycling network at a national level and to link this network with the existing international networks.

Q. In the presentation it was mentioned that one of the key challenges in ship recycling is to find ship yards that are working respecting ESM standards. Did you encounter any control systems in place on the matter? Did you identify the third-party that would carry out inspections in the framework of your project in China?

A. For China we did not yet identify it, although we met and talked with controlling officers that are out to overview the ship recycling yards’ compliance with national regulations. In the current situation, ship owners find it difficult to monitor the whole process and in some cases they had to allocate their own personnel to carry out quality assurance of the process.

Q. Will this feasibility study be presented at the upcoming meeting of the Open-ended Working Group? In the study, are there recommendations for further action from the Basel parties to work on? Will the study simply be presented there or will some kind of a programme of work emerge from that?


A. Actually this study was presented to the eleventh meeting of the Conference of the Parties to the Basel Convention, back in April-May 2013. It won’t be discussed again at next OEWG. At OEWG-9, the secretariat will be providing updates on the next project that we are undertaking on Inventories that was previously mentioned. In terms of recommendations resulting from this study and the case study, the secretariat is trying to assist parties in complying at ship recycling facilities with not only the Basel Convention but also the Hong Kong Convention. The entry into force of the Hong Kong Convention will certainly enhance the standards of the industries of this sector. Both the Basel and the Hong Kong conventions provide useful legal and policy frameworks to regulate this industry.