Shipbreaking sector buffeted by currency, regulatory headwinds:

The shipbreaking industry is facing pressure from currency fluctuations, slowdown in the steel sector and regulatory risks. This, despite a buoyant outlook on vessel availability.

The global shipping downturn and weak macroeconomic headwinds since 2009 have facilitated the growth of the ship breaking industry with an increase in the supply of ships to be scrapped.

The Alang shipbreaking yard, India’s biggest yard, dismantled 415 ships during 2011-12. Ever since its inception in 1982, Alang has emerged as the choicest ship-scrapping destinations for ship owners around the world. There are 173 plots to carry out ship-recyclingactivities. This is an industry by itself, as it provides around 30,000 jobs in Alang and generates steel totalling millions of tonnes every year, according to the Gujarat Maritime Board.

India, with its favourable weather conditions and low manpower costs, has emerged as a leader in terms of both volume and number of ships broken. Further, the relatively less stringent regulations related to environment and human health hazards have also aided the growth of the ship breaking business in India.

STEADY SUPPLY

With the outlook on international shipping freight rates being subdued over the near to medium term and large tonnage expected to come on stream post 2012, the shipbreaking industry is expected to continue witnessing a steady supply of vessels for demolition over the medium term, says ICRA in a report.

Shipbreakers have witnessed healthy growth in operating income in recent years due to increased availability of ships for dismantling. But profit margins are inherently thin due to low value addition and the highly competitive nature of the business. Additionally, margins have come under pressure in the recent past due to steep rupee depreciation, which has increased the cost of purchase of ships, coupled with a decline in realisations of the end product (steel melting scrap) due to slowdown in the steel-consuming sectors.

K. Ravichandran, Senior Vice-President and Co-Head, Corporate Ratings, ICRA, said that regulatory risk remains high for the shipbreaking business. The Supreme Court recently passed an order requiring stricter implementation of ship breaking norms in view of the environmental and health hazards. This, as well as any other proposed regulation could entail event-based risks for Indian shipbreaking operators and may affect their competitiveness against players in other countries, he said.

Source: Business Line. (raja.simhan@thehindu.co.in). 28 September 2012

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3945738.ece

Asbestos is still on the Agenda

Health hazard remains a big danger and ship-owners should be ready to manage it, reports Girija Shettar for Fairplay Magazine

Since January 2011, SOLAS (chapter II-I) has completely prohibited the new installation of materials containing asbestos. Despite this, even if a ship is clean of asbestos when built, it may not be so after a refit in a country that has not banned the material, such as China.

There, materials can be up to 10% asbestos and still be labelled ‘asbestos free’. Maintaining a double standard – one for non-ban and one for ban countries – may lead to lapses, as the recent recall of more than 18,000 Chinese-made, asbestos-containing cars from Australia, Brazil, Chile, Argentina, Uruguay and Singapore demonstrates.

Shipping industry professionals are under no illusions that asbestos is still a hazard. UK maritime professionals union Nautilus said: “It is a serious problem”. Union senior national secretary Allan Graveson was emphatic: “There is no safe level of asbestos”. He recounted incidents in Brazil where wives of men who worked with asbestos had died after coming into contact with spores when washing the men’s clothes.

Three of Graveson’s friends have died from mesothelioma, the asbestos-caused cancer, after exposure to the toxin when it was contained in engine room insulation. “It’s a horrific death. You get a diagnosis of death and about 18 months [to live],” he said.

Graveson claimed asbestos was still finding its way into ships in the UK but that the country had a “light touch” in regulating its use. By contrast, Denmark takes asbestos very seriously and has a strong enforcement regime, he observed. He claimed that tonnes of asbestos was imported into the UK from Canada, mostly in the form of spare parts.

Lloyd’s Register’s regulatory affairs specialist, Robin Townsend, said that because some countries do not control asbestos, it will find its way on to new ships “unless very high vigilance is maintained”. He reminded ship-owners that asbestos will exist on ships built before country bans were put in place. “Management of asbestos is a very important safety item, which should be recognised under ISM procedures,” he advised.

Phil Rozier, director of UK ship survey company Lucion Marine, advised a practical approach. ”Asbestos can be managed, maintained and dealt with quite easily,” he said, explaining that management depends on its type, quantity and the likelihood of it being disturbed. “It’s about managing the associated risk.” He added that a dedicated asbestos survey was “very useful”. This, along with an annual re-inspection, is a legal requirement under UK law, he noted.

Source: 27 September 2012

http://www.greenpassport.net/asbestos-is-still-on-the-agenda/

Shipbreaking industry sees an increase in supply due to slowdown:

The less stringent regulations related to environment and human health hazards has also aided to the growth of this industry

The shipbreaking industry has witnessed an increase in the supply of ships to be scrapped due to the global shipping downturn coupled with weak macro economic head winds since 2009, ICRA said in a report.

India, with its natural geographical advantage of a high inter-tidal gradient, favourable weather conditions and low manpower costs, has emerged as a leader in terms of both volume and number of ships broken.

Also, the less stringent regulations related to environment and human health hazards has also aided to the growth of this industry.

With the outlook on international shipping freight rates being subdued over the near to medium term and large tonnage expected to come on stream post 2012, the shipbreaking industry is expected to continue witnessing a steady supply of vessels for demolition over the medium term, the report said.

 K. Ravichandran, senior vice president and co-head, corporate ratings, said, “Regulatory risk remains high for the shipbreaking business. The Supreme Court of India has recently passed an order requiring stricter implementation of shipbreaking norms in view of the environmental and health hazards. This as well as any other proposed regulation could entail event based risks for Indian shipbreaking operators’ and may affect their competitiveness against players in other competing countries.”

Source: Business Standard. By Sharleen D'souza. 26 September 2012.

http://business-standard.com/india/news/ship-breaking-industry-sees-an-increase-in-supply-due-to-slowdown/188587/on

Shipbreaking sector in Bangladesh ‘back on track’:

Bangladesh: Having imported ships with an iron plate content totalling 2 million tonnes over the last nine months, Bangladesh’s shipbreaking business is ‘back on track’, according to industry experts. Some 206 ships have already been dismantled this year - a significant increase from the recent period when regulatory complexities plunged the sector into uncertainty.

Bangladesh is ‘a unique place’ for shipbreaking activities as nearly 100% of the products that come from the dismantled vessels are used, states Hefazatur Rahman, President of the Bangladesh Ship Breakers Association (BSBA). The country is currently in ‘top position’ in the dismantling sector and is hopeful that some 3 million tonnes of steel will have been extracted from ships before the year is out, he adds.

The situation differs greatly from that of a couple of years ago, with Mr Rahman pointing to improved safety standards for workers and a growing awareness of environmental factors as key drivers behind the change. Various legal campaigns by environmental groups almost shut down the sector in 2009, observes the BSBA’s Technical Adviser Captain Salahuddin Ahmed.

According to the organisation, the country’s 125 shipbreaking yards imported some 145 ships last year with an iron plate content of 1.7 million tonnes.

Source: recycling international. 20 September 2012

http://www.recyclinginternational.com/recycling-news/6535/other-news/bangladesh/shipbreaking-sector-bangladesh-back-track

Shipbreaking continues to kill workers in Bangladesh

NGOs call on Europe to stop illegal traffic of toxic ships

Brussels, 14 September 2012 – At least eight workers have lost their lives at the shipbreaking yards in Bangladesh this year. Two days ago, Ershadul Huq fell from a ship at the Sayed Steel Ship Breaking Yard, in Chittagong, Bangladesh (1). Hundreds of end-of-life ships are dismantled every year on the beaches of South Asia without sufficient concern for environmental protection and workers’ rights. According to data gathered by member organisations of the NGO Shipbreaking Platform, at least 12 shipbreaking workers died on the job in 2010 and at least 15 died in 2011. Many more workers were injured, sometimes maimed for life. Also unprotected from exposure to toxic fumes and asbestos at the shipbreaking yards, workers in addition suffer and can die of cancer.

Following a Court Order in 2009 (2), the Bangladesh Ministry of Industries, and the Ministry of Forest and Environment both issued new rules last year (3) for a better regulation of the shipbreaking sector. Both sets of rules are still being reviewed by the Courts to ensure they include all necessary requirements for protecting the environment and workers’ rights (4). In the meantime, ships laden with hazardous waste are still being beached in Bangladesh and shipbreaking workers are continuing to risk their lives when dismantling vessels laden with toxic materials without proper training, infrastructure and protective equipment (5). Last week, about 30 trees were cut illegally to create more space for beaching the ships. Already in 2009, twenty thousand trees had been cut in the same area (6).

“It is time for Bangladesh to put an end to the human rights and environmental abuses caused by the shipbreaking industry,” said Rizwana Hasan, chief executive of Platform member organisation Bangladesh Environmental Lawyers Association (BELA). “We succeeded in getting the Courts in Bangladesh aware of the disastrous conditions, now the Government needs to act, and also the countries from where these ships are sent – Bangladesh is no dumping ground for the world’s toxic ships ,” she added.

It is also the responsibility of Europe to ensure that toxic-laden European end-of-life ships are not exported to Bangladesh. In 2011, 35 European ships were beached in Chittagong (7), and already during the first half of 2012 at least 26 European ships were sold to Bangladeshi breakers. In reaction to the devastating conditions at the shipbreaking yards in South Asia, the European Commission published a proposal for a new regulation on ship recycling in March 2012. The proposal has however been strongly criticised by both NGOs and other European policy makers for not providing effective solutions, but rather succumbing to the shipping industry lobby. In July the European Economic and Social Committee, a European institution based in Brussels, said the proposal is “weak and full of legal loopholes”, and concluded that “the political will [to solve the problem] is manifestly absent” (8). The European Parliament is expected to debate the issue this coming autumn.

“Now the European Parliament needs to ensure that effective measures to stop the export of toxic European ships to developing countries are introduced – such measures should include an instrument to hold the polluter, in this case the ship owner, responsible for the proper dismantling of ships” said Ingvild Jenssen, director of the NGO Shipbreaking Platform.

Notes:

(1) See the news report: http://bit.ly/Q7ZRUq

(2) See the NGO Shipbreaking Platform’s press release of 17 March 2009: http://bit.ly/O3o1mr

(3) Respectively Ship Breaking and Ship Recycling Rules and Hazardous Waste; and Ship Breaking Management Rules, both dated 2011

(4) The rules need to comply with laws and conventions to which Bangladesh is a signatory : Basel Convention Act (1989), Bangladesh Environment Protection Act (1995), Bangladesh Marine and Fisheries Ordinance (1989), Bangladesh Labour Act (2006), Bangladesh Territorial Water and Maritime Zone Act (1974), Environment Protection Rules (1997)

(5) It is estimated that up to 95 percent of the workforce is made up of migrant labourers coming from Bangladesh’s poorest districts. As a result of the hard and dangerous working conditions, the population in the shipbreaking yards is young, male and often illiterate. Dr Biswajit Roy of the Department of Occupational and Environmental Health at the Dakha-based National Institute of Preventive and Social Medicine (NIPSOM) found that 88 percent of the workers interviewed suffered some form of accidental injury while working in the Chittagong yards (cited in a 2010 World Bank survey).

Find the survey here: http://bit.ly/R7xckJ

(6) See the news report: http://bit.ly/OCdUS0

(7) See the NGO Shipbreaking Platform’s list: http://bit.ly/A89gAS

(8) See entire EESC’s opinion: http://bit.ly/Pz8ANd

____________________

Contact:

NGO Shipbreaking Platform

www.shipbreakingplatform.org

Ingvild Jenssen, Director

Ingvild@shipbreakingplatform.org

+32 (0) 2 6094 419

Delphine Reuter, Communications Officer

Delphine@shipbreakingplatform.org

+32 (0) 2 6094 418

Bangladesh Environmental Lawyers Association

Rizwana Hasan, Director

bela@bangla.net

+88 017 1152 26066

Source: NGO Shipbreaking Platform. 14 September 2012

http://www.shipbreakingplatform.org/media-alert-shipbreaking-continues-to-kill-workers-in-bangladesh/

Salvage group begins pre-demolition on MV Miner:

Preliminary work to remove the MV Miner off Cape Breton is underway at last - nearly a year after the ship ran aground off Scatarie Island.

The salvage group has begun pre-demolition, using a scrap metal structure twice the thickness of the rusting wreck to test their equipment.

“Once we are there, we don’t have the ability to come back,” says Abe Shah of Bennington Salvage Groups. “We don’t want to take a knife to a gun fight.”

Engineers are on site at the MV Miner, mapping where cuts should be made and machines set up. Shah says the vessel’s fragile centre, which is vulnerable to hurricane season storms, will be first to go in demolition which is scheduled to start within eight days.

“It looks like we’ll have 22 to 26 days of beautiful weather coming up and we want to take that middle section out as quickly as possible,” says Shah.

Many in the fishing community of Main-a-Dieu wonder whether the ship will be removed in time to avoid sitting though another winter. A long slew of delays have created doubt among locals that they would ever be rid of the wreck. 

“The cynicism is still there, but I think people have their fingers crossed behind their backs that it is not going to be more of the delay after delay,” says Josephine Kennedy of the Multi-Species Licence Holders Association. “The red tape has been wiped off the books, so we’re just going to sit back and wait.”

Shah plans to cut the ship into larger sections to speed things up through hurricane season. The pieces will then be barged away from Scatarie Island before a provincially-issued permit to work on the wreck expires Dec. 1.

Source: 13 September 2012

http://atlantic.ctvnews.ca/salvage-group-begins-pre-demolition-on-mv-miner-1.955006

Totnes MP criticises Ark Royal scrapping:

An MP has criticised plans to sell off the Royal Navy's former flagship for scrap when it could have been sunk off Torbay as a money-making diving site.

Aircraft carrier HMS Ark Royal is being sold for £3m by the Ministry of Defence (MoD) to Turkey.

HMS Ark Royal

Totnes Conservative MP Dr Sarah Wollaston said it was a "disappointing decision".

The MoD said it had considered a range of proposals for the vessel, but decided none were feasible.

Dr Wollaston said: "Bringing it to Torbay would have given us a tremendous boost for the local economy.

"I'm very, very, very disappointed to hear this decision, and I'll be asking some questions as to why it has been taken."

Scylla reef

The 210m (688ft) vessel, launched in 1981, was put up for sale after it was axed by the government in 2010's Strategic Defence and Security Review.

Torbay's Wreck the World organisation bid £3.5m for the ship to sink it off Torbay to create an artificial reef.

A 125-year lease for a site off the coast was agreed in principle with the Crown Estate, and the project had the backing of Torbay Council.

Michael Byefield, from Wreck the World, said the success of a previous project nearby could have been repeated in south Devon.

Former frigate HMS Scylla was sunk off Whitsand Bay in Cornwall in 2004.

Mr Byefield said: "It generated £25m to £30m in revenue to Plymouth and the surrounding areas within five years.

"As well as that, it saw 263 species colonising on the vessel, and copious amounts of sustainable jobs created."

Hong Kong

He said the Ark Royal could have generated £25m for the bay over five years.

But Philip Dunne, minister for defence equipment, support and technology, said the right decision had been made.

"HMS Ark Royal, like her sister ships, served this country with great distinction," Mr Dunne said in a statement.

"Retiring her five years earlier than planned was a difficult decision but it was the right one that, combined with her sale, has saved over £100m."

Other proposals for the ship rejected by the MoD included converting it into a commercial heliport in London, a nightclub and school in China, and a casino in Hong Kong.

An official announcement on its future will be made in the House of Commons on Monday.

The ship, which led the UK's naval forces during the invasion of Iraq, is the fifth vessel to carry the name.

The first saw battle in 1588 against the Spanish Armada.

Source: BBC. 11 September 2012

http://www.bbc.co.uk/news/uk-england-devon-19549220

30 trees felled at Sitakunda shipbreaking yard:

At least 30 trees were felled for allegedly grabbing the land to set up shipbreaking yards in Sonaichhari coastal area of Sitakunda upazila.

This spot in Guramara area of Sitakunda was a government forest only three years back, when around 20,000 trees were chopped off by unscrupulous ship-breaking yard owners. And in the latest on Saturday night, unidentified people felled 30 other Kewra trees. Now there are only 10 trees left at the place, set to go extinct anytime! Photo: Anurup Kanti Das

Hasan Mia, beat officer of Coastal Forest Department of Sitakunda Range, said they had seized the chopped off Kewra trees on Sunday.

Locals said the trees were cut down on Saturday night and only 10 trees were left.

Yesterday, during a visit to the spot, this correspondent found two tin-shed houses with two signboards. One of those read --“Site for Nowshin Steel”, while the other --“MSS Steel Recycling”.

However, this correspondent could not trace any industry in Chittagong by the names.

Locals said the whole area was covered by coastal forest before early 2009. On July 3 of the year, around 15,000 mangrove trees were felled on instructions of some influential quarters who wanted to set up four ship-yards there.

On November 29 of the same year, around 5,000 trees of the forest were felled again.

Quoting locals, Hasan said people from the ship-breaking business are involved in the felling of the trees.

“We are about to lodge a case in this connection,” he added.

Source: The Daily Star. 11 September 2012

http://www.thedailystar.net/newDesign/news-details.php?nid=249309

Steel re rolling mills need to pay withholding tax on steel plates - FBR

The Federal Board of Revenue has categorically said that the steel re rolling mills are required to pay withholding tax on purchase of plates from shipbreaking industry despite payment of withholding tax on the import of ship under Section 148 of the Income Tax Ordinance 2001.

Official sources told Business Recorder here on Wednesday that the shipbreaking industry import ships and pay withholding tax at the import stage under Section 148 of the Income Tax Ordinance 2001. 

The withholding tax under Section 153(1) (a) of the Income Tax Ordinance 2001 is not applicable on the sale of goods where goods sold in the same condition as they were when imported. As ships were imported and subsequently dismantled, the local sale and supply of the ship plates would be subjected to withholding tax under Section 153(1)(a) of the Income Tax Ordinance 2001.

Officials said that on the other hand, the industry was of the view that withholding tax is paid on the import of ships and there is no justification of double taxation by charging the same on the local sale of ship plates to steel re rolling units. 

The Board has seriously viewed illegal clarifications issued by some field formations to shipbreakers, wherein it has been clarified that withholding tax under Section 153 of the Income Tax Ordinance 2001 was not deductible on sale and supply of parts of imported ship on which advance tax under Section 148 has already been deducted. The matter has been examined in the FBR under the provisions of Clause (a) of Sub-Section (5) of Section 153, which provides that the withholding tax under Section 153(1) (a) is not deductible on sale of goods:

Firstly, where the sale is made by the importer of the goods. Secondly, the tax under Section 148 of the Ordinance 2001 in respect of such goods has been paid and thirdly, the goods sold in the same condition as they were when imported. 

Sources said that the shipbreaking industry imports ships and cuts it into plates and supply the plates to re rollers. The imported goods are not supplied in the same condition as they were when imported. Hence the steel re rollers are required to withhold tax on purchases made from shipbreaking industry. It is, therefore, necessary that the provisions of the law should be implemented in letter and spirit in the field formations and wrong interpretations may be withdrawn immediately.

Source: Steel Guru (Sourced from Business Recorder). 7 September 2012

http://www.steelguru.com/middle_east_news/Steel_re_rolling_mills_need_to_pay_WT_on_steel_plates_FBR/282296.html

MEDIA ALERT – NGOS CALL ON GERMANY: STOP TOXIC SHIP BEFORE IT REACHES ALANG GRAVEYARD

Brussels, 7 September 2012 – The “Northern Vitality”, a 15-year-old containership owned by German company “Norddeutsche Vermögen Holding GmbH & Co” and chartered by Swiss company MSC, will  be heading next week for the shipbreaking beach of Alang in India unless German authorities step in to halt its illegal export. Hazardous materials such as asbestos, refrigerants, oil residues, sludge and heavy metals are bound to be onboard the “Northern Vitality”, either in its structure or in electronic equipment, paints and the ship’s stores. Under European waste law it is illegal to export an end-of-life ship containing toxic materials to India.

Northern Vitality

“We expect Germany to enforce existing export bans on hazardous waste trafficking to developing countries”, said Ingvild Jenssen, Director of the NGO Shipbreaking Platform, a global coalition of human rights, labour rights and environmental organisations. “German authorities have a clear legal obligation to stop the “Northern Vitality” from leaving the port of Wilhelmshaven in Lower Saxony.”

Yesterday the NGO Shipbreaking Platform alerted the Lower Saxony Ministry of Transport as well as Environmental Affairs of this imminent breach of European and German law. The Platform will closely be following up this case and already welcomes that the German authorities have taken initial steps to ensure that the European Waste Shipment Regulation is enforced.

The “Northern Vitality” was sold last week by its German owner to the famous shipbroker GMS, along with its sister ships: the “Northern Dignity” currently located in Singapore, and the “Northern Felicity” anchored in Dubai. GMS’s business is to buy ships at end-of-life and resell them to the South Asian shipbreaking yards. The economic and financial crisis is causing more ships to be sent for breaking. It is expected that 2012 will be a record year for the shipbreaking yards of South Asia.

On the Indian beach of Alang, hundreds of ships are broken every year and their steel recycled. Little or no care is given to the proper handling of the many hazardous wastes such as asbestos, refrigerants and heavy metals trapped within the ships’ structure, electrical equipment and in operational wastes. Once the ships are laid up on the tidal beach, hundreds of untrained and unprotected workers will dismantle them at the risk of being exposed to cancer due to inhalation of asbestos fibers and toxic fumes, or to fatal accidents caused by gas leaks, explosions, the falling from heights or being crushed by heavy steel plates. Hazardous debris and waste are released into the marine environment, burnt on-site or dumped in surrounding areas. More than 100 km of the coastal zone on both sides of the Alang shipbreaking yards is polluted.

On 30 July 2012, India made it clear that the “Exxon Valdez”, a ship famous for the oil pollution it caused in Alaska in 1989, and which was sold for demolition in May 2012, would be the last toxic ship to be allowed into Indian waters. The Indian Supreme Court directed the government to ensure a clean and pollution free marine environment. Hazardous materials thus need to be removed from the vessels prior to entering Indian waters for dismantling purposes.

“India simply cannot tolerate that steel is recycled from ships at such a high cost for the workers and the environment,” said Ritwick Dutta, an Indian lawyer from Legal Initiative on Forest and Environment (LIFE). “European ship owners let Indians bear the cost of dealing with the toxic waste contained in their ships, but  the Supreme  Court has stated over and over again that this is illegal.”

Contact:

Ingvild Jenssen

Director

NGO Shipbreaking Platform

Ingvild@shipbreakingplatform.org

www.shipbreakingplatform.org

Tel: 0032 (0)2 6094 419

Ritwick Dutta

Lawyer

Legal Initiative for Forest and Environment (LIFE)

ritwickdutta@gmail.com

Tel: 0091 1149536656

Source: NGO Shipbreaking Platform. 7 September 2012

http://www.shipbreakingplatform.org/media-alert-ngos-call-on-germany-stop-toxic-ship-before-it-reaches-alang-graveyard/

HMS Ark Royal sold for scrap by Ministry of Defence

Aircraft carrier HMS Ark Royal is being sold for £3m for scrap metal by the Ministry of Defence to help tackle a multi-billion pound defence deficit.

The removal of the Royal Navy's former flagship from service in 2011, five years early, was a "difficult but necessary decision", the MoD has said.

HMS Ark Royal

Its sale follows bids to turn the ship into a London heliport, a dive site off Devon or other facilities overseas.

An announcement on its future will be made in Parliament on Monday.

More details about the deal are expected to be released during that announcement.

The MoD said the "new, much larger" Queen Elizabeth aircraft carriers would start to enter service in 2017.

Sister ship HMS Invincible was also sold for scrap last year to a Turkish scrap metal firm.

The Ark Royal - which was in service for 25 years - was put up for sale on the Ministry of Defence's edisposals.com website, which sells off kit to raise money to equip the armed forces with everything from aircraft to clothing.

The ship, which led the UK's naval forces during the invasion of Iraq, is the fifth vessel to carry the name - the first saw battle in 1588 against the Spanish Armada.

The decision to bring forward its decommissioning was criticised because it leaves the Navy without the capacity to launch fixed-wing aircraft until replacements are brought in.

But the MoD said last year that it had access to "a range of international bases which allow us to project our air power around the world".

The Ark Royal has been docked at Portsmouth Naval Base since it was decommissioned.

One of the unsuccessful proposals had been to strip and sink the carrier for a diving site, put forward by Torbay-based dive group Wreck the World.

Source: BBC. 9 September 2012

http://www.bbc.co.uk/news/uk-19535911

As race hots up for top shipbreaking spot, MoEF clarifies Supreme Court ruling:

It remains uncertain who will win the top spot in global shipbreaking this year, experts say, pointing out that continuing legislation and court judgements in South Asia will have a major impact on demolition profitability. Meanwhile, in an attempt to assuage fears in Alang and to help Indian shipbreaking yards compete better against a resurgent Bangladesh, the Ministry of Environment and Forests (MoEF) has clarified the recent Supreme Court ruling in the country- a judgement that had thrown the business into some disarray.

India will face stiff competition from Bangladesh and Pakistan, analysts warn; the falling Rupee has already hit profitability hard, even though Alang remains the leading ship-recycling yard in the world catering to nearly 90% of Indian demolition activity. The Indian industry has an estimated annual turnover of about Rs 10,000 crore and directly or indirectly affects the livelihoods of 300,000 people.  However, it has lost almost a thousand crores this year because of cash deals- the prevalent custom- in a depreciating Rupee scenario.

Meanwhile, Bangladeshi shipbreaking activity- that was almost shut down last year- has accelerated. Reports the well-known demolition newsletter, the GMS weekly, "Bangladesh has indeed been the busiest market of the year so far, opening fully again at the start of the year."

GMS is still bullish on India. "Having been relatively quiet in the preceding few months due to a struggling currency (which saw some end buyers lose about 20% of the value of their previous purchases), India is now enjoying its moment in the spotlight as deals continue to be tucked away at vastly improved numbers", it says. 

The July 30 Indian Supreme Court judgement apparently upholding the Basel Convention- a treaty on the international movement of hazardous wastes, including ship recycling- had caused some panic in Alang. The ruling said, “... in all future cases of a similar nature, the concerned authorities shall strictly comply with the norms laid down in the Basel Convention ... before permitting entry of any vessel suspected to be carrying toxic and hazardous material into Indian territorial waters.”

Some buyers had stopped buying ships for scrapping after this ruling, fearing huge losses if the ships were not allowed into India. They also feared that dead vessels would have to be towed from other countries under the SC ruling. 

They should breathe easier now that the MoEF has stepped in to clarify the SC; it has said that the SC's orders issued earlier- in 2007- still apply; these have already been implemented in Alang and elsewhere and should pose no problems.

Some shipbreakers are circumspect about the future, though. "We will have to wait and see. Only after 3-4 months one can say whether India will be able to keep the top title this year as well," said an Alang-based shipbreaker to the Indian Express newspaper before the MoEF clarification.

Source: Manu’s News. 6 September 2012

http://contemplatingsnot.blogspot.com/2012/09/as-race-hots-up-for-top-ship-breaking.html