Monitoring The Problems Of Shipbreaking In Pakistan

WHAT IS THE ISSUE?

The conditions at the shipbreaking yards in Pakistan are dire. As in India and Bangladesh, the yards in Gadani operate directly on the beach without any impermeable and drained working areas to protect the sea and sand from pollution. As there is no infrastructure to deal with hazardous waste in Gadani, dangerous and polluting substances – such as asbestos, PCBs and residue oils – are simply dumped behind the shipbreaking area.

Workers’ health and safety are blatantly ignored in Gadani, and trade unions, such as the IndustriAll-affiliated Pakistan National Trade Union Federation (NTUF), have voiced strong concerns related to the systemic breaches of basic labour rights. Most of the shipbreaking workers in Gadani are migrant workers from the poorest regions of Pakistan.

Following the explosion of 1 November 2016 of the Aces tanker, there has been increased awareness, nationallyand internationally, of the dangers faced by the workers in the shipbreaking yards in Pakistan. In the beginning of 2017, five workers lost their lives in another explosion of a tanker. This led to a moratorium on the import of tankers for 2017 imposed by the government – yet the ban is expected to be lifted already in the spring of 2018, without concrete measures in place to prevent the reoccurrence of these tragedies.

Exactly one year after the catastrophic explosion, workers resumed the breaking of the Aces – and as fate has it – it caught fire again; fortunately, without casualties this time.

Our member organisations have been closely following the government’s promise to make the Gadani shipyards safer for workers. Our member organization Center for the Rule of Law Islamabad (CroLi) has been following the development of stricter laws for the shipbreaking industry. The improvements in the working environment, which have supposedly been put in place and which are the reason why the government is confident that Gadani can now resume breaking tankers, remain vague however, with no infrastructure in place to mechanise this heavy industry.

2017 marked a year of rallies and protests in Pakistan, with NTUF and workers demanding the enforcement of their rights, better labour laws, the use of proper health and safety equipment in the yards and more consideration from the authorities. The Dutch trade union, FNV, has conducted research on the shipbreaking industry in South Asia. The NGO Shipbreaking Platform Board Member, Dr Irfan Khan, has contributed considerably on the Pakistani perspective for the report.

Source: Hellenic shipping news. 20 June 2018

https://www.hellenicshippingnews.com/monitoring-the-problems-of-shipbreaking-in-pakistan/

Demolition Activity Falls As Tonnage Supply Dwindles

Activity in the ships’ demolition market has been slowing down over the course of the past few days. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as the Eid holidays finally came to an end, there appears to have been a slowdown in activity last week due to a lesser supply of tonnage and also, a weakening of the respective currencies in the Indian subcontinent destinations. In Pakistan, the recyclers are starting to factor in the cost of the sales tax duty, coming into effect this week, for any new available tonnage and thus, this will restrict any potential improvement in rates for the foreseeable future”.

According to Clarkson, “Bangladesh and India have both suffered a weakening of their currencies against the U.S. Dollar this week which may also stem some positive offering from the waterfront. But all in all, we are still witnessing a somewhat stable and relatively calm market. Meantime, a fresh argument has reportedly broken out over the European ship recycling regulation, due to come into force at the end of this year. European Ship Owners stress, rightly, that there is insufficient capacity on the European list of approved yards and strongly believe some of the Indian yards are brought into the equation. The usual counter arguments from the lobbyists is that this is not true and there is sufficient capacity”.

The shipbroker added that “the European Ship Recycling regulation was established in 2013 calling for a list of approved facilities to be drawn up and for ships under European flags to then only be recycled at one of these approved facilities. The regulation also calls for all vessels calling at E.U. ports to have an approved and valid Inventory of Hazardous Materials (IHM) kept on board the vessel. This latest disagreement is because the current list of approved recycling yards consists of only 21 facilities, simply not sufficient enough for the demands of recycling vessels during the year (especially now that China has announced no further importing of international flagged vessels for recycling). All the facilities on the list are in Europe and no Indian subcontinent yards are being considered due to the word ‘beaching’. Yet, the improvements made to the Indian yards in particular, have been immense over recent years and on par with their counterparts in Europe. Unfortunately, these environmental organisations will not accept a vessel having to be beached despite major improvements towards labour and the environment in the recycling destination of India and the PHP yard in Bangladesh. The E.U. commission are working towards incorporating some of the better yards in India on their list with certain inspections/visits having been arranged, but it does not help their plight with consistent negative reporting from the various lobby groups. The E.U. are being urged to rapidly include non-European facilities onto the list, in particular, the Indian recycling yards that have been approved under the H.K. Convention. It is hoped that common sense will prevail and those yards that have upgraded their facilities will be rewarded with E.U. approvals. Interesting times indeed lie ahead in this respect so we at the moment, can only ‘watch this space!’, Clarkson Platou Hellas concluded.

Meanwhile, in a separate note, GMS, the world’s leading cash buyer of ships said that “with the summer / monsoon season fully under way across the Indian sub-continent, prices and demand have started to decline across the board for various reasons. While on the one hand, the seasonal labor returning to their home towns due to the constant rains affecting the cutting processes and hampering overall production is the traditional reason for the cooling markets, on the other hand, declining local steel plate prices, currencies and missing cutting permissions have driven demand for tonnage, down this week. As such, most end Buyers are preferring to temper their purchases as levels and interest slips in anticipation of a potential fourth quarter rally, which has historically been a busy period in the ship recycling industry and this year is expected to be no different, given that owners (particularly in the tanker sector) continue to struggle with dire charter rates and (wet) units seem to fall out of the sky. A sustained level of scrapping of tanker and offshore fleets will be needed just to aid levels and bring a certain equilibrium back to these sectors in the years ahead – just as dry and container rates have finally bounced back, following a period of sustained recycling in the years gone by. Supply is expected to persist going forward and sales will continue to take place, often to speculative Cash Buyers who do not have end Buyers lined up but prefer to utilize their available finance streams. As such, as long as the inflow remains at a steady trickle rather than a deluge, prices should remain relatively stable as the markets sail through the monsoons”, GMS commented in its weekly analysis.

Source: Hellenic shipping news. 06 July 2018

https://www.hellenicshippingnews.com/demolition-activity-falls-as-tonnage-supply-dwindles/

Shipping industry presses to undermine European Ship Recycling Regulation

On Monday, the EU member states’ experts on ship recycling met in Brussels to discuss the latest developments, six months ahead of the application of the 2013 Ship Recycling Regulation. With the recent decision by the Chinese government to stop the import of end-of-life ships for scrapping, the shipping industry is quick to lament that there will not be enough recycling capacity and that there will be too few options for them under the EU List of approved recycling facilities. The industry claims that the standard set by the EU must be lowered so that beaching yards can be approved.

As much as it is a pity that the Chinese yards who have already made efforts to be included on the List may now no longer be receiving EU-flagged ships for recycling, the Platform has calculated that the facilities which are currently on the List, the 21 EU-based ones only, are in fact sufficient to recycle the entire EU-flagged fleet at end-of-life. [1]

Moreover, there are still other facilities outside the EU, as well as those operating in Italy and Norway, which are expected to be included on the List before the application of the Regulation. Indian beaching yards that have applied to be on the EU List will not be included as there is no way for these yards to comply with the requirements of the Regulation as long as ships are beached. The overall capacity and sizes of all the facilities that are compliant with EU law will easily accommodate the recycling needs of EU-flagged ships by 1 January 2019. The scaremongering of the shipping industry therefore needs to be debunked, and the European Commission should not bow-down to the “fake news” spread by the ship owners.

SeaEurope, IndustriAll Europe and the Platform have urged that a financial incentive is needed to push more ship owners towards clean and safe ship recycling. French trade Union CGT also recently called upon the French government to support the development of ship recycling capacity in the Mediterranean. With China potentially leaving the international market of ship recycling already next year, there is a clear opportunity for other regions to tailor for clean and safe ship recycling off the beach.

“The EU should aim at ensuring that the European shipping industry no longer causes harm to the environment and workers on the South Asian beaches. 30 percent of end-of-life ships are owned by European companies – compared to only six percent registered under an EU flag. There will be a need to support the expansion of existing or building of new facilities to ensure the clean and safe recycling of the many larger vessels that are owned by European companies”, says Ingvild Jenssen, Director of the NGO Shipbreaking Platform. “Circular economy is the buzz-word and a return scheme for ships is the solution”, she adds.

[1] The 21 facilities that are currently on the EU List have the capacity to recycle at least 1 mill LDT. Whilst most can only take in smaller vessels, at least 10 of the facilities on the List can take in larger vessels. In 2017, less than 500.000 LDT were registered under an EU flag at end-of-life, out of which 245.827 LDT ended up on the South Asian beaches. All EU-flagged vessels broken last year could have been recycled in facilities that are on the EU List, both in terms of LDT and size. Even when adding also the 423.369 LDT of the 24 ships that swapped their EU flag for a non-EU one few weeks before beaching, the total tonnage does not exceed the capacity of the current EU-listed facilities.

Source: Hellenic shipping news. 21 June 2018

https://www.hellenicshippingnews.com/shipping-industry-presses-to-undermine-european-ship-recycling-regulation/

EU Must Speed Up Approvals of Asian Shipbeaking Yards

The European Union should step up its assessment of Asian shipbreaking yards to allow the effective implementation of the Hong Kong Convention, said Maritime Strategies International (MSI).

In its MSI Foresight, the independent research and consultancy firm noted that by December 31 2018, all vessels flying the flag of an EU member state (around 12% of the current global merchant fleet) will need to comply with the EU Ship Recycling Regulation (SRR); the rule that brought the Hong Kong Convention into EU law.

From 2019 onwards, any end-of-life, EU-flagged vessel will need to be scrapped at an approved ship recycling facility, a list which the EU last updated in May. Although nothing officially bars any non-EU country from gaining approval, at the moment all 21 shipyards on the list are in the EU and none have experience of breaking large commercial vessels.

The option of flagging vessels out of the EU before selling them as scrap elsewhere is limited as this falls foul of the EU Waste Shipment Regulation legislation that recently caught out Dutch shipowner Seatrade, it said.

Seatrade was hit by fines totalling €2.35m after it sold four reefers for scrapping in India, Bangladesh and Turkey; three of the company executives may also face a six-month prison sentence.

As the maritime industry finds itself increasingly faced with legislation designed to tackle the poor condition of current beach scrapping processes, it’s vital for shipbreaking countries to modernise their operations.

In Bangladesh, for example, ship scrapping forms an integral part of the economy; Bangladeshi steel production is heavily dependent on the scrap removed from ships and around 50% of the raw materials for steel production come from shipbreaking.

There is still a long way to go before Bangladesh is accepted onto the EU’s list of accepted ship recycling facilities, but a partnership between Maersk and a scrapping facility at Alang in India suggests a way forward.

Modernisation of Asian scrapyards is vital Maersk has been keen to promote the investment made in improving conditions, safety and environmental impact of the facility, which it now believes is on a par with Chinese and Turkish scrappers. If the facility in Alang is not approved by the EU, Maersk may find itself testing the boundaries of legislation, as much of its fleet sails under a Danish flag.

The option to scrap in China – mostly in dry docks – also seems to be coming to an end with the Chinese government announcing in May that it will no longer be taking foreign ships for scrapping as part of a drive to reduce pollution and waste, resulting in a strengthening of prices as shipbreakers maximise throughput before the end of year cut-off.

The development in China casts the feasibility of the EU’s SRR into doubt. The SRR will come into force prior to the deadline of end 2018 if 2.5 Mn LDT of approved shipbreaking capacity is approved, but at present, just 300,000 LDT has been sanctioned.

"Despite the more stringent scrapping policies, we expect the number of vessels scrapped to rise dramatically in 2019. As regulations for ballast water and emissions limits push more vessels out of the market, an increasing number of sub 20-year old vessels will be removed," the report said.

To put the situation in context, three quarters of the 200+ ships scrapped in Q1 18 headed to the Indian sub-continent. Accordingly, the solution must be found there. Progress is being made at Indian yards with a number applying to recycle European-flag ships, though concerns remain over subcontractor standards.

A step-change required from the EU The five Indian yards that are already being considered for EU inclusion would add 323,000 LDT of annual capacity, while four others recently applying would potentially contribute a further 300,000 LDT.

The EU must step up its assessment of these yards and ensure that acceptable conditions exist to allow the effective implementation of the Hong Kong Convention.

Source: marine link. 22 July 2018

https://www.marinelink.com/news/eu-speed-approvals-asian-shipbeaking-439814

Fire at Gadani as Tanker Scrapping Resumes

Three months after authorities gave the green light for tanker beachings to resume at Gadani, Pakistan, another fire broke out aboard a decomissioned VLCC, trapping several workers inside the burning hull.

Local sources report that the fire broke out during demolition work. 20 laborers were rescued, but four are believed to be trapped within the vessel.  National Trade Union Federation (NTUF) leader Nasir Mansoor said in a social media update that 100 workers were at the site at the time of the incident.

Gadani's shipbreakers have experienced multiple fires resulting in loss of life in recent years. These incidents included a fuel tank explosion aboard the FPSO Aces in November 2016, which killed at least 26 workers and wounded 58, and a second fire aboard the same vessel in November 2017. Separately, a fire broke out on an unnamed LPG carrier in December 2016, and then a second time in January 2017, with five fatalities and an unknown number of missing workers during the second incident. The deadly blazes resulted in a temporary ban on tanker scrapping at Gadani, which was lifted in April 2018.

Labor rights advocates assert that shipbreaking is Pakistan's deadliest industry, with little regulation and inhumane working conditions. "Even jungles would have some laws, but there are none here," alleged Mansoor, in comments to Pakistan's Express Tribune.

Norway's sovereign wealth fund recently excluded four shipowners from its portfolio for selling end-of-life vessels to Pakistani and Bangladeshi shipbreakers, citing a pattern of "severe environmental damage and serious or systematic violations of human rights." Demolition brokerage GMS contests this characterization and asserts that the industry is making improvements, especially at yards that are pursuing certification to Hong Kong Convention ship recycling standards.

Source: maritime-executive. 16 July 2018

https://www.maritime-executive.com/article/fire-at-gadani-as-tanker-scrapping-resumes#gs.gd4WjVk