28 July 2011

Bangladesh superior court halts ship scrapping operation:

Bangladesh’s Supreme Court on Sunday overturned a lower court’s ruling that allowed a ship scrapping operation until October. The court will review the case on Thursday. Last week the high court allowed conditional importation of toxic ships and their dismantling. It extended the time on grounds that importers and ship dismantlers must ensure the safety and environmental protection of the public and workers. The Bangladeshi Environmental Lawyers Association had appealed a previous ruling on the extension with the Supreme Court.

Attorneys of the Bangladeshi Shipbreakers Association, which is engaged in a $1.5 billion ship recycling trade, are scheduled to be at the hearing to ensure the original decision is upheld.

On March 7, the high court permitted import of hazardous ships and their scrapping for two months on several conditions, saying that no ships can be scrapped without cleaning toxic gas, and asbestos and toxic materials must be removed by experts before the ships are dismantled.

The high court relaxed the ban after leaders of the world’s largest shipbreaking industry guaranteed it would adopt strict strictly rules to protect workers, such as an age limit of at least 18, training and proper safety gear, and cleansing of toxic material from ships prior to arrival.

It ordered the Department of Environment (DOE) to form a 3-member committee to monitor whether the importers and shipbreakers are complying with the given conditions.

Bangladesh’s main source of 4 million tons of steel for construction is from the dismantling of cargo ships.

Source: Asbestos Course. Saleem Samad (saleemsamad@hotmail.com). Thursday, 28 July 2011

It’s the Scrap Heap for Redwood City’s Mystery War Ships:

The ships served in a mission to recover a sunken Soviet sub, worked with plans of espionage, and became the inspiration for the villain’s vessel in a James Bond movie.

Two onetime top-secret ships that called Redwood City home – the giant Hughes Mining Barge and the Sea Shadow stealth ship – will become scraps of metal and wood, the Navy disclosed Thursday.

The mining barge, its mission a long-kept secret, became big news in the 1970s when it took part in a CIA operation designed to recover a sunken Soviet submarine. Later, the Sea Shadow was built inside the barge after it returned to its Redwood City home.

The Navy offered both vessels, now anchored at the mothball fleet near Benicia, to any interested maritime museum from 2006 to 2011, Navy spokesman Chris Johnson told Patch.

The Naval Sea Systems Command official said several letters of interest were received. Of those, only “one organization submitted an application which was (unfortunately) determined to be non-viable.” No date has been set for the “dismantling and recycling.”

US Navy Sea Shadow stealth craft.
The 164-foot Sea Shadow, the inspiration for the villain’s seagoing lair in the James Bond movie “Tomorrow Never Dies,” has a slanted superstructure designed to thwart enemy radar.

Lockheed Martin built the Sea Shadow inside the barge, officially called HMB-1, after the clandestine operation that recovered at least part of a sunken Russian submarine off Hawaii.

Such a public end is ironic considering how hushed the information about the ships was at one time. The Sea Shadow was kept under wraps until 1993 when it was unveiled to wide press coverage. The ship, which, from a distance resembles the Confederate ironclad Merrimac, made voyages on San Francisco Bay as cameras clicked. It became so “unsecret” there is even a plastic model kit available of the Sea Shadow, which had a speed of 10 knots and a crew of 10.

The Sea Shadow moved at night, towed inside the barge and launched into the darkness.

“We operated during the night with impunity,” crewmember S.K. Gupta told the Wall Street Journal in an interview after Navy war games off San Diego. “We could disappear and sneak up on whomever we wanted. Nobody thought we could do that.”

He also recalled watching a glass of soda on the bridge barely ripple in 12-foot waves.

Long before it housed Sea Shadow, the barge was involved in what President Gerald Ford called “one of the greatest exploits in the history of espionage.”

In its time, the barge was a familiar sight on the Redwood City waterfront, where it could be viewed from Highway 101. Seeing the hangar-sized barge was easy but learning just exactly what was going on inside was not.

The news media had been fooled by a cover story that claimed billionaire industrialist Howard Hughes was going to use the barge as part of a plan to salvage minerals from the bottom of the ocean. In fact, the CIA was behind the 1974 operation designed to recover the Soviet submarine K-129 that went to the bottom about 1,500 miles northwest of Hawaii.

The aim, according to later reports, was to recover a codebook along with an intact nuclear missile. Soon after the salvage operation ended, the Los Angeles Times reported a two-inch thick journal was recovered that provided details of the sub’s nuclear potential.

The HMB-1 was not just any barge – it was a submersible one that had a giant claw inside. It was built to be submerged under the Glomar Explorer, the mother ship for the operation, and use its claw to grab the submarine, some histories claim.

In hindsight, the barge was the real mother ship: it served as the womb for both the claw and, later, the Sea Shadow, which today rests inside the barge.

Source: Redwood City Patch. By Jim Clifford. 15 July 2001

Bangladesh Supreme Court Toughens Up on Shipbreaking Yards:

The Supreme Court of Bangladesh has recalled a decision stemming from a lower court last week that lifted a ban allowing shipbreaking yards to continue operations through October and are reevaluating the case, Reuters reports.

Shipbreaking in Bangladesh is a $1.5 billion industry that activists purport is extremely dangerous not only for the environment, but for the workers involved as well. Activists are fighting for a year-long ban on the ship recycling industry in Bangladesh, which is the top ship recycling nation from 2004-2008.

Currently the Bangladesh government is cracking down on the pollution-intensive practice that typically takes place in developing countries due to less stringent environmental regulations. To instill tougher safety and environmental rules on dismantling vessels, the government placed a ban on breaking for a year.  However, a court overturned that ban after the industry had vowed to adopt stricter rules, including a worker age limit of 18, proper training and safety gear, and cleaning the ships of toxic materials before arriving to the yard.

Shipbreaking near Chittagong, Bangladesh
Following the lift of the ban, the Supreme Court recalled the lower court’s file and has placed it under review for July 28.

As scrapped ships are the main source of steel for impoverished nations like Bangladesh, the government hopes the Supreme Court will uphold the lower court’s decision to lift the ban, despite opposition from activists. 

Source: Maritime Executive. 27 July 2011

GDSA Monthly Market Report - Demolition Activity of June 2011:

Genco sees shipbreaking rising on high scrap prices/low freight:

Scrapping of dry bulk tonnage is set to rise further, stimulated by high ferrous scrap prices and a prolonged period of depressed freight rates, New York-listed dry bulk ship owner Genco Shipping & Trading forecast Wednesday.

Gerald Buchanan, president and CEO of Genco, told analysts on a second-quarter earnings call that Capesize demolition in 2011 could reach 100 vessels after 51 ships were scrapped in the first half of this year.

The company did not give any 2010 comparisons for Capesize demolition, but, according to Norwegian ship broker Fearnleys, only one ship was scrapped in the first half of last year and two in all of 2010.

Quoting statistics from Clarkson Research Services, he said that some 13.5 million dwt of all dry bulk carrier types had been scrapped so far this year compared with 5.7 million dwt in the whole of 2010.

He said the world Capesize fleet had grown by a net 75 vessels, taking account of 126 new deliveries and 51 deletions. At the end of June, the world Capesize fleet numbered 1,233 ships, up 6.5% from the 1,158 at end-2010. Overall, the world dry bulk carrier fleet, encompassing all size ranges, had seen net additions of 382 vessels. The world bulk carrier fleet numbered 8,536 ships at the end of June, up 4.7% from the 8,154 vessels at the end of December.

Buchanan noted that 18% of the world's dry bulk fleet is more than 25 years of age, while 24% of it is more than 20 years old. John Wobensmith, CFO at Genco, said that among the Capesize ships scrapped so far this year were vessels that were 18-20 years of age, which meant that shipowners were being "proactive" in addressing the supply/demand imbalance of ships.

"Scrapping will continue to play a significant role, especially if the freight rate environment remains depressed for a prolonged period," said Buchanan. "Scrapping is essentially an economic equation. It is our opinion that the current combination of high scrap steel prices and suppressed rates will support increased scrapping."

Wobensmith said the company expected to see a turnaround in freight rates in about 12-18 months, with a return to a supply/demand balance. "We base it on a slowdown of newbuild deliveries. Even more importantly, a lot of the expansion plans from the miners will be coming on stream, with a projected large push in 2012 and an even larger push in 2013, with 500 million [metric] tons of iron ore coming on stream over the next several years, which is more than half of what was shipped in 2010."

Buchanan said that public statements from the key mining groups pointed towards a 50.5% increase in seaborne iron ore capacity between 2010 and 2015, to 501 million mt.

Genco's Q2 Earnings Slide on Lower Freight Rates

On Tuesday, Genco reported second quarter net attributable income of $10.1 million, or 29 cents/share, down from $36.8 million ($1.16/share) a year earlier. The Q2 result, released after the New York Stock Exchange closed, beat analysts' expectations of around 24 cents/share.

Earnings fell because of lower freight rates, but revenues held up better, as a result of operating a larger fleet.
  • Genco's voyage revenues fell to $98.5 million in Q2 2011 from $105.3 million a year earlier.
  • The number of ships operated in Q2 was 60 compared with 40 in Q2  2010.
  • Time charter equivalent earnings per vessel fell to $18,299/day in Q2 from $30,405/day in Q2 2010.
In the first half of the year, net attributable income fell to $23.5 million, (67 cents/share) from $70.2 million ($2.24/share). But voyage revenues were flat at $199.1 million in Q2 2011 compared with $200 million a year earlier.

The company operated 60 ships in the first half of the year compared with 40 in the corresponding 2010 period. Average time-charter equivalent rates per ship fell to $18,720/day in the first half of 2011 from $30,326/day a year earlier.

Source: Platts. By Anthony Poole, anthony_poole@platts.com. 27 July 2011