Brazilian
companies could face fines of as much as $3.2m if they violate international
standards
RIO DE JANEIRO: Brazilian
regulators are planning to strengthen rules to prevent exporters such as
Petrobras and Vale SA from selling ageing ships to buyers who offload the
vessels in South Asia’s controversial coastal scrapyards.
Earlier this month,
authorities decided to develop a legal framework to ensure former Brazilian
ships don’t end up with recyclers notorious for using dirty and dangerous
methods, federal environmental watchdog Ibama said by email. Brazilian
companies could face fines of as much as 10 million reais (Dh11.6 million, $3.2
million, ) if Ibama finds they violate international standards by letting their
vessels end up in substandard shipbreaking facilities in India, Pakistan and
Bangladesh.
By selling ships to buyers
who then send them to South Asian beaches for dismantling, the two Brazilian
exporters aren’t alone. But Vale — which sold two vessels that were sent to
India this year and intends to offload four more — is one of the few mining
companies that still owns its fleet, while other oil producers such as Royal
Dutch Shell Plc are adopting cradle-to-grave practices in which ships end up
being recycled in a safer and more sustainable fashion.
‘Green’ ships
In March, Ibama began
looking into the sale of a Petrobras vessel called Lobato to recyclers planning
to scrap the ship in India, the agency said. That followed a complaint lodged
by Brussels-based nongovernmental organisation Shipbreaking Platform. Sindmar,
Brazil’s maritime trade union, joined the NGO in accusing both Petrobras and
Vale, the country’s largest exporters, of abusing standards set by the Basel
Convention, which is meant to prevent the transport of hazardous materials to less
developed countries.
Both Petroleo Brasileiro SA,
as the state-controlled oil company is formally known, and Vale say they
offload ships in good faith to reputable buyers. Vale, the world’s largest
iron-ore miner, said it adopted a strategy this year of only selling to dealers
that possess a “green ship recycling” classification, following standards
established by the International Maritime Organization and the Hong Kong
Convention on Ship Recycling.
For its part, Petrobras said
it auctions older vessels to companies that it believes plan to operate them.
It’s up to the buyers to make decisions about the ship’s final destination, the
Rio de Janeiro-based company’s press department said by email.
Dangerous
chemicals
The shipbreaking industry in
South Asia has taken measures to clean itself up. Most of those efforts are
insufficient, according to Shipbreaking Platform. The NGO describes the trade
at many yards as toxic because vessels are beached at high tide, then ripped
apart by workers who can be exposed to dangerous chemicals. Injury and death
rates can be high and toxins sometimes leak into the sea, the group says.
Forcing Brazilian companies
to monitor more carefully where their former vessels are dismantled could drive
up costs. Not doing so risks fines and turning off a growing number of
investors focused on environmental and social responsibility.
“What they do with ships at
the end of their life does matter,” said Julie Gorte, senior vice president of
sustainable investing at Pax World Management, which manages about $4.5
billion. Being associated with South Asian shipbreaking would be the type of
activity that would cause her firm to engage the company and possibly rethink
investments, she said by telephone.
Pax World sold its Petrobras
shares as the oil company become embroiled in a graft scandal in Brazil. It
hasn’t owned Vale shares for five years. “With Brazil you already have this one
strike,” Gorte said. “When you add something on top, you are multiplying your
reputational risk.”
Source: gulf
news. 06 September 2017
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