Posted: October 20th, 2022

An analysis of the creation of a global ship recycling fund in the framework of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009

An analysis of the creation of a global ship recycling
fund in the framework of the Hong Kong
International Convention for the Safe and
Environmentally Sound Recycling of Ships, 2009

ABSTRACT
Title of Dissertation: An analysis of the creation of a global ship recycling fund in the
framework of the Hong Kong International Convention for the
Safe and Environmentally Sound Recycling of Ships, 2009.
Degree: MSc
This dissertation undertakes an analysis of creating a global ship recycling fund to
promote green ship recycling targeted under the International Maritime Organisation
(IMO)‟s Hong Kong International Convention for the Safe and Environmentally Sound
Recycling of Ships, 2009.
Green ship recycling is always expensive therefore the ship recycling yards opt for the
conventional methods without following safety norms and environment friendly
practices. On the other hand, ship owners also are not interested in monitoring of the
procedure opted by the yards in recycling of their ships because they are interested in the
best price from their scrap ships.
To achieve the goal of green ship recycling, enforcement of the IMO‟s Convention by the
all the stakeholders of Ship Recycling industry in an effective manner is needed.
Therefore, a provision of incentive is needed to motivate the stakeholders to opt the green
ship recycling in place of conventional methods and the additional burden arisen due to
this reason, needs to be compensated from the Ship Recycling Fund proposed to be
created.
This dissertation discusses about the cost-barrier in green ship recycling and proposes a
mechanism to be developed as a market-oriented incentive scheme suggesting
arrangement of the Ship Recycling Fund, its monitoring and disbursement method.
KEY WORDS: Ship Recycling Convention, green ship recycling, safety of human and
the environment, hazardous materials, toxic wastes, conventional and standard methods
of ship recycling, Ship Recycling Fund.
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TABLE OF CONTENTS
DECLARATION………………………………………………………………………………………………………….i
ACKNOWLEDGEMENTS …………………………………………………………………………………………….ii
ABSTRACT……………………………………………………………………………………………………………..iii
LIST OF TABLES …………………………………………………………………………………………………….. vii
LIST OF FIGURES…………………………………………………………………………………………………… viii
LIST OF ABBREVIATIONS…………………………………………………………………………………………..ix
CHAPTER- 1 Introduction…………………………………………………………………………………………..1
1.1 Background ……………………………………………………………………………………………………………. 1
1.2 Objectives………………………………………………………………………………………………………………. 3
1.3 Methodology………………………………………………………………………………………………………….. 4
1.4 Scope and Limitation……………………………………………………………………………………………….. 5
CHAPTER- 2 Ship Recycling Industry…………………………………………………………………………….7
2.1 Ship Recycling: An Overview…………………………………………………………………………………….. 7
2.2 Ship recycling states and their market share………………………………………………………………. 8
2.3 Ship Recycling: A Process ……………………………………………………………………………………… 11
2.4 Market developments and ship recycling ……………………………………………………………….. 15
2.5 Procedures and practices for ship recycling…………………………………………………………….. 19
2.6 Stakeholders in ship recycling ……………………………………………………………………………….. 21
2.6.1 Ship owner……………………………………………………………………………………………………….. 21
2.6.2 Ship broker………………………………………………………………………………………………………. 22
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2.6.3 Ship recycling yard ……………………………………………………………………………………………… 22
CHAPTER- 3 Ship Recycling: Existing and Standard Procedures ……………………………………….23
3.1 Ship recycling destinations……………………………………………………………………………………… 23
3.2 Econometric analysis of the ship recycling market…………………………………………………….. 25
3.3 Existing procedures for ship recycling…………………………………………………………………….. 27
3.4 Occupational hazards and standard procedures for ship recycling………………………………. 29
3.5 Gap between existing and standard practices of ship recycling…………………………………… 35
CHAPTER- 4 Regulations/Guidelines on ship recycling …………………………………………………..38
4.1 The environmental issue: Ship recycling…………………………………………………………………… 38
4.2 Adoption of the Hong Kong Convention, 2009………………………………………………………….. 39
4.3 Hong Kong Convention and its enforcement…………………………………………………………….. 40
4.4 Structure of the Convention …………………………………………………………………………………… 42
4.5 Analysis of the Convention …………………………………………………………………………………….. 44
CHAPTER- 5 Ship Recycling Fund: An Incentive Scheme …………………………………………………51
5.1 Background ………………………………………………………………………………………………………….. 51
5.2 Cost a barrier in green ship recycling……………………………………………………………………….. 52
5.3 Estimation of Ship Recycling Fund …………………………………………………………………………… 57
5.4 Financial structure of the Fund ……………………………………………………………………………….. 59
5.5 Financial mechanism of the Fund ……………………………………………………………………………. 60
5.6 Disbursement mechanism of Ship Recycling Fund …………………………………………………….. 63
5.7 Similar system existing for waste management ………………………………………………………… 65
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5.8 Summary ……………………………………………………………………………………………………………… 67
CHAPTER- 6 Discussion and Conclusions …………………………………………………………………….68
6.1 Maritime industry and ship recycling……………………………………………………………………….. 68
6.2 Ship recycling: a commercial activity ……………………………………………………………………….. 69
6.3 Conclusions ………………………………………………………………………………………………………….. 71
REFERENCES …………………………………………………………………………………………………………73
APPENDICES …………………………………………………………………………………………………………78
Appendix A…………………………………………………………………………………………………………..78
Appendix B…………………………………………………………………………………………………………..79
Appendix C …………………………………………………………………………………………………………..80
Appendix D…………………………………………………………………………………………………………..81
Appendix E …………………………………………………………………………………………………………..82
Appendix F …………………………………………………………………………………………………………..83
Appendix G…………………………………………………………………………………………………………..84
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LIST OF TABLES
Table 1- Ship Recycling Industry contributions in Bangladesh, India and Pakistan…………………12
Table 2- Main cost and profit margins of ship breaking and recycling, mid-2009 …………………..15
Table 3- Average age (in years) of broken-up ships by type 1999-2009 ………………………………..17
Table 4- Mean age, tonnage and scrap price per scrapping location (1978-2007)……………………26
Table 5- Average waste materials left on board vessels to be recycled ………………………………….28
Table 6- Maximum exposure limits for contaminants………………………………………………………….34
Table 7- Tonnage scrapped globally and in Bangladesh, India and Pakistan, 2010-2030 …………57
Table 8- Conversion factors…………………………………………………………………………………………….57
Table 9- Requirement of additional fund for green ship recycling ………………………………………..58
Table 10- World merchant fleet by country of domicile as of January 1st, 2006-2010 …………….61
Table 11- Addition to the world merchant fleet by nation and foreign flag distribution …………..61
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LIST OF FIGURES
Figure 1- Leading recycling states in terms of ship numbers………………………………………………..10
Figure 2- Leading recycling States in terms of tonnage……………………………………………………….10
Figure 3- Market share of leading recycling States in terms of tonnage…………………………………11
Figure 4- Factors responsible for ship recycling decisions…………………………………………………..19
Figure 5- Participants in the ship recycling process…………………………………………………………….21
Figure 6- Global recycling volumes 2000-2009 and projected recycling 2010-2030……………….56
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LIST OF ABBREVIATIONS
ARF Advance Recycling Fee
ARN Auto Recycling Netherlands
BIMCO Baltic and International Maritime Council
DNA Deoxyribo Nucleic Acid
DWT Dead Weight Ton / Tonnage
ELV End-of-life Vehicle
ESM Environmentally Sound Management
GT Gross Ton / Tonnage
ICS International Chamber of Shipping
IGO Inter-governmental organization
IHM Inventory of Hazardous Materials
ILO International Labour Organization
IMO International Maritime Organization
ISRT International Ship Recycling Trust
JARC Japan Automobile Recycling Promotion Centre
LDT Light Displacement Ton / Tonnage
MARPOL Marine Pollution
MEPC Marine Environment Protection Committee
NGO Non-governmental organization
NOx Nitrogen oxide
NVMSRP National Vehicle Mercury Switch Recovery Programme
OECD Organization for Economic Co-operation and Development
P & I Club Protection and Indemnity Club
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PCB Polychlorinated Biphenyl
R & D Research and Development
RO-RO Roll on- Roll off
SENS Shiftung Entsorgung Schweiz (an organisation in Switzerland)
SOx Sulphur oxide
SWICO Swiss Association for Information, Communication and Organisational
Technology (an organisation in Switzerland)
TBT Tributyltin
U. K. United Kingdom
U.S. / U.S.A. United States / United States of America
UNCLOS United Nations Convention on the Law of the Sea
UNCTAD United Nations Conference on Trade and Development
VLCC Very Large Crude Carrier
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CHAPTER- 1
Introduction
1.1 Background
Shipping is the most environment friendly and cheapest mode of transportation
which is responsible for carriage of goods of more than 90 % of the world tonnage. Ships,
the focal point in the shipping industry, have a life span of 20-25 years for commercial
use and after that period they are replaced by new ones with the latest technology and
more environmentally friendly design. Accordingly, old ships are taken out of operation
and sent for recycling as there is little scope to convert them for other uses. Ship
recycling offers the most environmentally sustainable way of disposing of ships, with
virtually every part of hull, machinery, equipment and fittings being reused or recycled as
scrap metal. It can, therefore, be said that decommissioning of ships is a commercial
process to convert end-of-life ships into steel and other recyclable items which gives an
opportunity to the industry to take the incentive of economic benefits and employment
opportunities.
Up to the first half of the twentieth century, ship recycling was done all across the
world but the market was dominated by the United States and the United Kingdom.
Subsequently, enforcement of regulations on safety of life and environment by the
western countries compelled the industry to shift from there due to cost-escalation. The
ship recycling industry being labour intensive, requiring 500-1500 employees for
dismantling of a ship, shifted to the Mediterranean and then gradually to the regions with
low labour costs. Demand for scrap metals also affected the market. Yards, after
purchasing the ships, separate the steel, usable machines, instrument, devices and other
parts from it for suitable reuse. Scraps are mostly used to produce new steel; therefore, it
can be said that the steel content of the ship determines its price. Tankers and bulk
carriers have higher prices than other vessels due to their steel content. In 1993, the
demand for steel was very high in China and it dominated the market with a major share
of the world‟s scrapping business (Mikelis, 2007). However, it was then taken over by
India and Bangladesh.
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In the present era, Asian countries viz Bangladesh, India, Pakistan, Turkey and
China, are leading the ship recycling industry in the world. Ship recycling activities
which are unsafe and environmentally unfriendly, are done in Bangladesh, India and
Pakistan on a manual basis without basic facilities and proper training of the workers
about handling the hazardous material (China and Turkey have already taken initiatives
towards green ship recycling). Cheaper labour cost, liberal rules and regulations to
govern the ship recycling activities motivate the ship owners and ship brokers to
approach these countries.
With the intention to ensure safe and environmentally friendly recycling of ships,
the International Maritime Organisation (IMO) after making groundwork on the issue
came up with a new Convention on it. In the Diplomatic Conference in Hong Kong on
11-15 May, 2009, the International Convention for Safe and Environmentally Sound
Recycling of Ships, 2009 was adopted by the IMO. The Convention was open for
signature by any state at the Headquarters of the Organisation from 1st September, 2009
to 31st August, 2010 and shall now be open for accession by any state. Till now, sixty
states have signed the Convention including Turkey, one of the main ship recycling states
(Beck, 2010, p. 1). The Convention shall enter into force 24 months after the date on
which the conditions mentioned in the Convention (Article-17) are met. As mentioned
above, out of the five main ship recycling states, Turkey has signed the Convention on
26th August, 2010 but the other four states may take some time to sign it (IMO press
release, 2010).
IMO‟s Ship Recycling Convention, 2009 has the intention to standardize
recycling of ships all over the world. But green ship recycling requiring safe and
environmentally sound facilities, has cost higher in comparison to its conventional
method which attracts the industry to opt for the latter benefiting all its stakeholders. As
per the NGO, Greenpeace, to achieve the target of environmentally friendly ship
recycling, it is necessary to create a fund to meet the additional financial burden due to
environmentally sound scrapping practices by the yards. IMO also in its meetings agreed
in principle to the need for establishing an International Ship Recycling Trust (ISRT)
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Fund for technical co-operation activities and encouraging ship recycling countries
towards safe and environmentally friendly recycling of ships (Mikelis, 2006). After
endorsement in its ninety-fourth session (20-24 June, 2005) by IMO‟s Council, ISRT
Fund was established with effect from 1st May, 2006.
Similarly, the European Commission is also planning to create the Ship
Dismantling Fund for proper recycling of the ships with a strong link
to the European Union. Here a strong link relates to the flag or ownership of a ship. As
per the Commission, IMO‟s Convention on the subject will take time to come into force,
may be up to 2015 and fully effective by 2020. To control environmental pollution and
ensure human safety, they are planning to recycle their ships at their recycling yards with
the financial support through their Ship Dismantling Fund proposed to be created.
Introduction of the Hong Kong Convention, 2009 without creation of a parallel financial
mechanism may lead to circumvention of the rules and increased use of substandard
scrapping yards by ship owners to avoid extra costs (“The Ship Recycling”, 2005).
As ship recycling is a service to the shipping community instead of a dumping
industry, the shipping industry should pay for it instead of being paid for. The financial
gap between the conventional and green dismantling methods need to be analysed and for
viability of green ship recycling, there appears a need to create a global „Ship Recycling
Fund‟ to meet the additional financial burden on ship recycling yards opting for green
recycling. This dissertation will undertake an analysis of creating a global ship recycling
fund in the framework of the Hong Kong International Convention for the Safe and
Environmentally Sound Recycling of Ships, 2009.
1.2 Objectives
To achieve the goal of green ship recycling, enforcement of the IMO‟s
Convention by the Ship Recycling States in an effective manner is needed. To have better
understanding about the problems faced by these states in enforcement of the Convention,
this research intends to first discuss about the reasons for shifting the ship recycling
market from one corner of the world to another. The trend of the market will indicate the
factors responsible for selection of a site suitable for the industry. To achieve the target of
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green ship recycling, it is necessary to tackle the key factors properly so that the risk of a
parallel market developing in any corner of the world can be avoided. Secondly, the
research analyses the procedure existing in the ship recycling states compared with the
standard practice. The role played by the stakeholders of the industry needs to be
understood properly to have a good understanding of the problem faced in achieving the
target of standard practices for green ship recycling. Then the research elaborates the
guidelines issued by international organisations on ship recycling and analysis of the
responsibility assigned to the stakeholders under the IMO‟s Convention on the subject.
Lastly, it intends to analyse the practical problems of the stakeholders in compliance with
the guidelines under the Convention (i.e. the cost-escalation) and explore a viable
solution to the problem in green ship recycling suggesting for a provision of incentives to
motivate the ship recycling yards to opt for the green ship recycling in place of
conventional methods and the additional burden arisen to be compensated from the Ship
Recycling Fund proposed to be created.
1.3 Methodology
There are some questions which need to be replied before drawing conclusions on
the research topic. They are as follows:
 What is the reason for shifting the ship recycling market from one place to
another?
 The standard procedure for ship recycling and the procedure existing in the yards.
 What are the provisions made in the Ship Recycling Convention, 2009 and other
regulations / guidelines issued by international organisations for green ship
recycling?
 What are the responsibilities bestowed upon the stakeholders of the ship recycling
industry in the Ship Recycling Convention, 2009?
 What are the problems faced by the stakeholders in accepting those
responsibilities and viable solution to those problems?
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 Sources and disbursement mechanism of global „Ship Recycling Fund‟ proposed
to be created to compensate the additional financial burden arisen due to green
ship recycling.
For the above said analysis, information from periodicals, conference proceedings
and the reports of the NGO, „Greenpeace‟, the international consulting firm, „COWI‟ and
many other reputed organisations, have been collected. Analysis of the cost for green ship
recycling method alongwith the conventional method, has been done on the basis of the
calculation made in the report submitted by „ECORYS‟, a research and consultation
company, to „Greenpeace‟, a NGO. The Ship Recycling Convention being a recent
development, no books published on green ship recycling as per the Convention could be
found; therefore, deliberations of the conferences and reports available on ship recycling
have been used for the research.
1.4 Scope and Limitation
Since ship recycling is a very broad topic, some areas like survey and
certification of ships to be recycled, legal regime of the Conventions adopted by IMO,
ILO and other international organisations on ship recycling have not been covered under
this dissertation. As mentioned above, ship recycling is a service to the shipping
community and therefore, they should come forward to take the responsibility of green
ship recycling and if necessary, additional financial implication in achieving the target
should also be borne by the stakeholders as a cost of waste management. This dissertation
focuses on analysis of the problems faced in green ship recycling alongwith an analysis
of the creation of a global „Ship Recycling Fund‟ proposed to be created to meet the
additional cost for adopting environmentally sound ship recycling facilities as a viable
solution. To achieve the goal of green ship recycling, the yards will require appropriate
infrastructural facilities for environmentally sound waste disposal, training of staff, their
protective clothing and appropriate tools. Providing incentives for green ship recycling
by the creation of a global ship recycling fund, formulating its sources and disbursement
mechanism intended to be covered under this research to meet the additional financial
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burden of green ship recycling, may be helpful in achieving the goal of IMO‟s Ship
Recycling Convention, 2009.
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CHAPTER-2
Ship Recycling Industry
2.1 Ship Recycling: An Overview
Waterways are the oldest mode of transportation in the world. As is known from
the history, in the medieval period (9th Century-16th Century) trade flourished through sea
routes only; when road and air routes were not developed, people enjoyed the goods of
far away with the help of the shipping sector. Silk and spices were the most popular items
for trade through the sea route from Asian countries. Even in the present era, shipping is
the cheapest and most eco-friendly mode of transportation for bulk cargo. After enjoying
a boom in passenger ferries in the 19th century, this sector has seen its recession in the
20th century but after globalisation of the world trade, the shipping industry again shot up
in the last quarter of the century after shifting of the production units to the countries
having cheaper man-power and resources (Stopford, 2009, p. 143).
Globalisation of trade has given the world market a good opportunity for import
and export of goods. The emergence of Asian countries as key drivers of modern
shipping, has also helped the current shipping boom (Knapp, Kumar and Remijn, 2008,
p.1024). Accordingly, the cargo movement through sea-route increased significantly
which resulted in a demand for a good number of ships offering ship owners a chance to
increase their fleet by acquisition of new ships or replacement of their ships smaller in
size by larger ones. Introduction of more efficient ships also compelled the ship owners to
scrap their ships, physically sound but rendering uneconomical. In the very low post1973 freight market, the medium size steam-turbine tankers unable to compete with lower
fuel consuming diesel tankers, were scrapped in bulk due to this reason only (Buxton,
1991, p. 107). From time to time changes in regulations on environmental aspects also
compelled ship owners to dispose of their ships; for example, the requirement of double
hull tankers under the MARPOL Convention1
(Amendments to Regulation 13G of Annex

1 The International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the
Protocol of 1978 (MARPOL 73/78) entered into force on 2 October 1983 (Annexes I and II). In 1997, a
Protocol was adopted to add a new Annex VI. Amendments to 13G of Annexure I MARPOL 73/78 adopted
through Tacit procedure entered into force on 05/04/2005.
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I MARPOL 73/78). All these developments resulted in the decommissioning of a good
number of old ships and ship owners were inspired to approach the market offering the
best price for recycling. Asian countries having cheaper labour costs offering a handsome
price for these old ships came into the picture as the favourite destination for recycling of
ships.
Ship recycling in its present form is a labour intensive activity demanding low
skills and therefore, is expected to grow in the countries having low labour costs. In
addition to low labour costs, recycling takes place either in the close proximity to a large
scrap importing market or in a location where there is a local steel industry using a high
proportion of scrap. Taking these characteristics into consideration, the Indian subcontinent, particularly Bangladesh, India and Pakistan, are the most promising locations
for large scale recycling of ships (Drewry, 1977, p. 41).
2.2 Ship recycling states and their market share
Ship recycling prices have a good link with the demand from steelworks which do
not fluctuate as much as second-hand price of ships in absolute or relative terms. The
second-hand price of ships has a strong link with the freight markets, current new
building prices along with the type, age and condition of a particular ship. On the
contrary, ship recycling prices depend on the cost-structures of a particular country opted
for demolition of ships. The prime factors for the ship recycling price are the value of
realized materials, cost of demolition and the cost of delivery of ship to the recycling
yard. The value remaining after deducting the cost of demolition and delivery cost from
the value of realizable materials of a ship becomes the profit from the deal.
Material received from the ships to be recycled, can be separated into the
following categories:
(i) Scrap steel for furnaces,
(ii) Re-rollable steel,
(iii) Non-ferrous metals,
(iv) Reusable items (machinery, wooden furniture), and
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(v) Unusable and rubbish.
In the Asian market, re-rollable steel is used particularly for reinforcing bars for
concrete construction. Reusable equipment like engines, generators, boilers, electrical and
plumbing items, wooden planks, bars, furniture, refrigerators, air-conditions also has a
good market in these countries. On the other hand, in developed countries such items are
valued little more than scrap which makes the realization value of scrap materials 50%
higher in the Asian market than in the European market. Resultantly, after taking into
considering all the factors including cheaper labour force the ship recycling price offered
by the Asian market becomes just double the price offered in Europe. Due to these
reasons, the share of the Asian market in ship recycling increased gradually from 40% in
the 1960s, 60% in mid the 1970s reaching around 90% in the 1980s and more than 95%
(excluding Turkey‟s share) in 2000. Even in Asia, the market shifts in accordance with
the wages and prosperity. Ship recycling started by Japan gradually shifted to Taiwan and
Korea. Taiwan dominated the market with around 50% of the share from late 1960s until
1988 (Buxton, 1991, pp. 111-112). In the 1990s, India and Bangladesh took over the
market (Figures 1-3).

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Figure 1- Leading recycling states in terms of ship numbers (ships >499 GT)

Figure 2- Leading recycling States in terms of tonnage (million GT) (ships >499 GT)
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Figure 3- Market share of leading recycling States in terms of tonnage (ships >499
GT)
Source (Fig. 1, 2 & 3): Mikelis, N. E. (2007, September). A statistical overview of ship recycling. Paper
presented at the International Symposium on Maritime Safety, Security & Environmental Protection,
Athens, Greece. https://monkessays.com/write-my-essay/martrans.org :8093/symposium/papers/Track%20B/B42%20mikelis.pdf
2.3 Ship Recycling: A Process
Ship recycling is the processing of waste or rubbish back into raw materials to
produce new items. It is beneficial to the individual, the community, the world offering
the most environmentally sustainable way of disposing of old vessels, with every part of
the hull and machine complex being reused or recycled. Disposal of ships after its
economic life was referred earlier as “ship demolition” or “ship scrapping” (Sinha, 1998,
pp. 397-403). Since most of the things obtained from the ships are either recycled or
reused directly, now the word “ship recycling” is used by the shipping sector for this
purpose. According to Rolf Westfal-Larsen, a ship owner and former chairman of
International Chamber of Shipping (ICS), everything received from the ship has a further
life and nothing goes to waste; therefore, ships are not scrapped but recycled (Varcoe,
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1999, pp. 28-30). As stated above, most of the items removed from ships are reused;
some after processing and some directly. Engines, generators, boilers, electrical and
plumbing items, wooden planks, bars, furniture, refrigerators, air-conditions, these are the
items taken from the ships which are sold directly to the market. In Bangladesh, garment
manufacturing factories use these engines and generators. Boilers are used mainly in rice
mills, garments washing plants, knitting plants and other industries (Parkinson, 20052
).
As is known, scraps are mostly used to produce new steel. Therefore, tankers and
bulk carriers have prices higher than other vessels due to their steel content. Scraps
received from these ships are recycled to get steel to be used in the construction industry
resulting in saving two thirds of the energy, when compared with steel production from
raw materials. In the absence of any domestic source of iron ore, Bangladesh gets 50 %
of its steel requirements from recycled ships (see Table 1):

Table 1- Ship Recycling Industry contributions in Bangladesh, India and Pakistan,
2008/2009
Bangladesh India Pakistan
National steel production 2.2–2.5 m tons 55 m tons 3 m tons
Scrap steel from ship
breaking
Up to 1.5 m tons Up to 3.5 m tons Up to 0.8 m tons
Ship breaking steel‟s
contribution to production
50% 5-6% 15%
No. of re-rolling mills 250 to 350 1,500 operational 330
Scrap yards (total no.) 40 active 130 active (183) 30 active (132)
Estimated no. of workers
in yards
22,000 16,000 – 20,000

6,000–8,000
Source: World Bank Report (Unpublished) on ship breaking in South Asia, November 17, 2010. p. 2.

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Page number not available but placed as executive summary after the slides.
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As is known, tankers are used to carry oil, toxic wastes, sometimes radioactive
materials and extremely poisonous chemicals. Disposal of such wastes requires training
and facilities to avoid damage to human health. Not only does it directly affect the health
of the workers, it also has an impact on the environment. When workers strip the ships
marooned on the sea-shore, there is severe contamination of the sea bed, eventually
seeping into the marine food chain. Due to these reasons, ship breaking is considered a
rough business in the world.
In the second half of the twentieth century, after implementation of the safety
regulations by developed countries, the industry shifted to the Mediterranean and then
gradually to the Asian countries having cheaper labour-force and liberal safety and
environmental regulations. Shifting of the ship recycling industry from developed
countries can be attributed to the following four main factors (Sinha, 1998, p. 397):
• The industrialised countries were no longer in need of scrap steel.
• In the U.S. and Europe, steel was available in abundance, which brought down the
prices of scrap metals. Thus, ship scrapping was no longer profitable for them. In fact,
many of the European countries later became net exporters of steel.
• Construction regulations no longer permitted the use of re-rolled products.
• With development, labour costs increased; safety and environmental regulations
became strict, which made it difficult for scrap dealers to continue in the business.
This industry shifting from the Mediterranean reached Taiwan in Asia, where
cheaper labour force was available. South Korea too remained in this industry for some
time. In the mid 1980s, about three-fourth of the ship scrapping industry was located in
Taiwan, China and South Korea, Taiwan being the leader. Thereafter, Taiwan developed
economically and for the same reasons as given above, it closed the demolition yards in
the early 1990s. By then, the scrapping industry had moved to India, Bangladesh and
Pakistan because of their economic necessity and lax environmental laws. The reason for
these countries‟ involvement in the highly labour intensive ship recycling, is that they are
over-populated and have the need for employment for the masses. Thus, using primitive
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methods, the ship scrapping industry provides employment opportunities to the people in
these countries along with providing a market for recycled parts.
As per the information available, wage rates in Cambodia and Myanmar are lower
than India and Pakistan whereas Bangladesh can compete with them on wages. From
wage point of view, the risk of relocation in future of ship recycling industry to these
countries having cheaper man-power can not be ignored. But there are many other factors
also affecting the industry like domestic steel demand, market for other recyclable items,
natural condition of high tide gauge and wide beaches. Keeping in view all the factors,
there is low possibility for relocation of the industry from South Asia in near future
(World Bank Report, 2010, p. 2).
As stated above, ship recycling is considered a rough business but its impact on
human health and environment can be minimised by following the standard procedure.
After following the standard procedure ship recycling becomes costlier as it involves
sufficient infrastructure, requisite training of workers and proper facilities for disposal of
hazardous waste removed from the ships. Presently ship recycling is done mainly on a
manual basis with the facilities available on beaches. The margin being small in the ship
recycling business and the nature of the market being volatile, ship recycling yards are
not ready to invest in mechanisation which can improve their productivity (Stopford,
2009, p. 649). Volatility of the market and small margin (see Table 2) in the business are
therefore, the hurdle for investment in the industry. In addition, sometimes changes in the
policy of the states also create problems for these yards.
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Table 2- Main cost and profit margins of ship breaking and recycling in Bangladesh,
India and Pakistan, mid-2009 (recalculated to percent for comparison)
Costs (in %) Bangladesh India Pakistan
Purchase of ship 69 73 70
Labour costs 2 4 4
Consumables 5 4 4
Financial costs 3 4 5
Taxes, tariffs and duties 5 5 13
Other costs (including investment costs
rents, and other costs)
1 2 1
Total costs 85 92 97
Comparable profit 15 8 3
Source: World Bank Report (Unpublished) on ship breaking in South Asia, November 17, 2010. p. 4.
2.4 Market developments and ship recycling
The decision to sell a vessel depends on a number of variables. The relation
between these variables can be shown in terms of the formula:
mt
Po – (Pt) > ∑ (Yk – Ck)
K=1
A vessel is sold if the difference of present sale price (Po) of the vessel and the expected
net present value (Pt) is greater than the summation of the net present values of the net
voyage revenue i.e. income (Y) – cost (C) expected to be earned during the time (t). Here
the income (Y) will be dependent upon both current and expected earnings anticipated
from the market. The anticipated change in the cost (C) over the same period is also an
important factor for the decision to sell a vessel.
The decision to sell a vessel becomes a decision to recycle it if the net present
value of the discounted net earnings of the vessel plus the discounted value of its
anticipated residual value at the end of its operational life, is less than the amount of
money that could be realised immediately from the sale for recycling of the vessel. When
a vessel gets older, its operating cost rises and service speed tends to fall as scheduled and
16
un-scheduled repair time becomes greater, fuel consumption rises, equipment
deteriorates, repairs and maintenance costs rise. Along with the rise in operating costs,
the insurance cost of the aging vessel also increases proportionally to counter the
increased trading risks. The decision whether to continue trading or to sell the vessel, is
reviewed during its special survey becoming due at four to five years of interval. Trading
costs of a vessel include two components i.e. voyage costs and operating costs. Voyage
costs cover fuel cost, port expenses and canal dues whereas operation costs cover the
expenses on manning, insurance, repairs/maintenance, stores and spares, administration
and other sundry expenses of the ship (Drewry, 1977, pp. 26-33). Some of the life cycle
factors of a ship responsible for its recycling price Assessment are as follows:
(i) Type of ship: This gives an indication of configurations and the sort of plate sizes to
be worked. It also indicates about the global or local trading, tramp or liner
operation.
(ii) Ship age: It works as a guide to design considerations and make up of steel content.
As the ship grows older, its condition deteriorates gradually and expenditure on its
maintenance increases accordingly making the operating and voyage cost higher. The
speed, efficiency and cargo handling capacity of old ships make them less
competitive as many reputed charters do not accept old ships for shipment of their
cargo. Regulations/Guidelines on environmental aspects from time-to-time coming
into force also catalyse the ship owners to dispose their old ships. But there is no
specific age of a ship recommended for its scrapping. It depends on the care and
expenditure made by the ship owner on its maintenance. The statistics of the last
decade indicate that average life of ships is increasing. Tankers have the least life
(i.e. 28 years) whereas passenger ships the maximum i.e. 43 years. The average age
of broken-up ships by type during the period 1999-2009 is given in Table 3:
17
Table 3- Average age (in years) of broken-up ships by type 1999-2009
Year Tankers Bulk
carriers
Container
ships
General
cargo
ships
Ro/Ro
ships
Passenger
ships
Total
1999 26.2 25.0 24.8 26.7 23.8 35.1 26.1
2000 26.9 25.9 25.7 27.3 23.8 30.1 27.0
2001 28.0 26.7 26.9 27.4 23.8 35.9 27.7
2002 28.3 26.6 26.0 28.2 23.7 37.7 28.0
2003 29.3 26.5 25.5 29.3 27.3 33.6 29.1
2004 29.5 27.3 30.5 32.9 28.1 37.6 31.7
2005 31.5 28.1 30.6 31.9 30.2 36.7 31.9
2006 30.0 28.9 28.1 32.3 28.6 36.6 31.4
2007 31.4 29.1 29.6 34.9 25.2 41.0 23.5
2008 31.1 30.6 29.1 33.6 28.2 23.8 32.5
2009 28.3 30.6 27.0 31.5 28.9 43.0 30.4
Source: Shipping Statistics and Market Review, Volume 54 No. 1/2, 2010, p. 35
(iii) Yard of build and conversion work: It is a further guide to steel and fixture/fittings.
(iv) Other items: In addition to the above components, the real condition of the ship‟s hull
is a prime factor for pricing of a ship.
(Drewry, 1973, pp. 5-11)
Apart from the above factors, the price paid to the vessels to be recycled rises
when the freight market is strong. Supply of ships is declined this time due to rising Net
Pay Value of anticipated net earnings from future trading and ship recycling yards are
forced to increase the price of the ships to be recycled. The inflationary trend of trading
costs also influences recycling trends throughout the period under review.
The market cycle also plays a great role in ship scrapping decision. The market
cycle is a process maintaining balance between supply and demand of tonnage for ships.
At the boom stage of the shipping market, the freight rate becomes high and orders for
ship building are given by ship owners earning substantial profit from enhanced freight
18
market. But at the slump stage, the freight rate goes down and the market having surplus
fleet compels the ship owners to opt for pre-mature disposal of their ships for recycling
due to heavy operational loss. Between the year 2004 and 2008, the shipping sector was
enjoying the boom and freight rates went high due to high demand for maritime
transportation. This demand kept even older ships in operation during the period which
resulted in a record low number of vessels being offered for recycling. The figure came
down to 300-400 ships (larger than 499 GT) during this period against the annual average
of 700-800. Following the recent economic recession in 2009, the demand for maritime
transport declined and the number of ships recycled during the year reached 1200. It is
expected that the ship recycling market will get good number of ships for at least the
coming 5-10 years due to massive booking done by the ship owners during the boom
period (“Ship Breaking”, 2010, p. 3).
In this way, it can be said that ship recycling decisions depend on many factors,
each of them dependent on other factors. Figure 4 shows the factors responsible for the
recycling decision of a ship.
19
Figure 4- Factors responsible for ship recycling decisions
Source: Drewry Shipping Consultants (1996). Ship Scrapping: Locations, Activity, Price Trends and
Problems, p. 21
2.5 Procedures and practices for ship recycling
After decision to end the economic life of a ship, it is removed from fleet site and
is towed to the ship recycling site. The process of ship breaking is completed in three
stages. At the first stage, the ship owner is undertaking various operations like pumping
out bilge water, blocking off intakes and valves, removal of all non-metal objects along
with potentially dangerous gases. Then the ship is either moored or beached/dry-docked
20
and large metal structures are removed from the ship. After removal, pumps, auxiliary
engines and other pieces of equipment are sold in the market. The remainder of the ship is
then cut into sections before making smaller pieces as per the requirements of rerolling
industries. Thus, recycling of ships occurs in a series of steps:
 Vessel survey: Diagram of all rooms, compartments, tanks and storage areas is
used to identify areas containing hazardous materials like asbestos, PCBs,
hazardous waste, fuel and oil. Preliminary sampling of materials is conducted to
decide the cutting plan identifying the compartments to be cut first.
 Removal of fuel, oil and other liquids: Removal of fuel, oil, other liquids (bilge,
ballast water) and combustible materials from the ship, is then started which is
continued throughout the recycling process. After issuance of a hot work
certificate by the marine chemist, it is considered safe for hot work like the use of
cutting torches and saws to dismantle the ship.
 Equipment removal: Engines, generators, boilers, electrical and plumbing items,
refrigerators, air-conditions are the equipment removed from the ship to be
recycled and sold in the market.
 Removal of asbestos and PCBs: The engine room usually contains the most
asbestos which is removed from the ship. Then PCBs containing materials
accessible are removed.
 Preparing surfaces for cutting: Following asbestos and PCBs removal, paint is
removed from the surfaces to be cut. Presence of hard-to-remove and potentially
toxic materials sometimes requires specific cut-line preparation for the safety of
workers.
 Metal cutting: Upper deck and superstructure are cut first, followed by the main
deck and lower decks. Large parts of the ship are cut first and lifted by cranes to
the ground where they are cut to specific shapes and sizes required by the
foundry or smelter. Ultimately, the remaining part of the hull is pulled ashore and
cut.
21
 Recycling of materials: Scrap metals like steel, aluminium, copper and nickel
alloy are stored by grade and composition and then sold to re-melting firms or
scrap metal brokers.
(A guide for ship, 2000, pp. 1-1 – 9-23)
2.6 Stakeholders in ship recycling
Ship owners, flag states, ship recycling yards/states and many intermediaries are
involved in the chain of the ship recycling industry. Figure 5 below outlines the
participants involved in the ship recycling process.
Figure 5- Participants in the ship recycling process
Source: Drewry Shipping Consultants (1996). Ship Scrapping: Locations, Activity, Price Trends and
Problems, p. 58
2.6.1 Ship owner
The ship owner is the only authority to take decision to sell the ship to be
recycled. He can make the deal directly with the ship recycling yard or take the help of
ship brokers. As the ship sales and purchase market is worldwide, it is difficult for a ship
owner to devote sufficient time on it in addition to his main job of ship operations.
Therefore, normally all the sales and purchases of ships are done in the international
22
market through ship brokers. Ship owners provide the ship brokers full details of vessels
alongwith the terms for their sale. The deal is finalised by the ship owner with the ship
broker offering the highest price. Terms like “as is” or “as is where is” are mentioned in
the agreement and in the latter term, the arrangement to bring the vessel to be recycled, is
done by the buyer(s).
2.6.2 Ship broker
In the maritime market, there are ship brokers specialised in the deal for ship
recycling. They have detailed knowledge about ship recycling yards existing all over the
world. They provide the information to the ship owner about the demand / supply
situation in the market and the ship recycling prices of different types of ships along with
the information about the ships sold recently. Sometimes they forecast the market trend
also to Help the ship owner in taking a decision. Negotiation becomes easier between the
ship owner and ship recycling yard after taking the services of ship broker acting as an
intermediary passing on the information to another party. The sale may be channelled
through a specialist intermediary dealing with the cash purchase of ships for demolition
assuming the responsibility for arranging the sale and the ship‟s physical delivery. Thus,
the transaction-chain between a ship owner and ship recycling yard may involve one or
more middlemen operating in either‟s interest.
2.6.3 Ship recycling yard
Ship recycling yards rely on the information provided by the ship brokers. On the
basis of the specification provided by the ship owner, yards calculate the price of the ship
to be recycled as per the quantity of ferrous and non-ferrous items expected to be
received from it. Yards are normally allowed to inspect the ship before its purchase but in
case of not being allowed, they are dependent on the calculation about ferrous and nonferrous items on the basis of the ship‟s age, type, flag, owner and country of built.
Although the scrap steel provides most of the value of the ship, non-ferrous items smaller
in quantity even make good earnings from the sale directly to the market.
23
CHAPTER- 3
Ship Recycling: Existing and Standard Procedures
3.1 Ship recycling destinations
After enjoying freight escalation for 3-4 years, the shipping industry experienced
a drastic decline in demand in the second half of the year 2008 due to world-wide
recession. Decline in demand forced the industry to adjust its supply. In the shipping
industry, surplus supply has five ways for adjustment with the declined demand. Firstly,
it will stop ordering new tonnage; secondly, it may demolish vessels; thirdly, it may
cancel orders at the shipyards; fourthly, vessels may slow steam to reduce the effective
capacity supplied by the existing fleet; and finally, it may temporarily withdraw the
existing tonnage from service. As the industry felt a drastic decline in demand in the
second half of 2008, ship owners had no way after some period but to sell their older
vessels even at very low price. During the last quarter of 2008, ship recycling yards in
India got 80 vessels for scrapping followed by Bangladesh getting 70 vessels, China
getting 20 and Pakistan 11 vessels. The ship recycling industry experienced in 2009 its
largest growth period in history. During the first four months of 2009, 339 vessels were
reported to be sold for recycling against 487 vessels during the whole year of 2008. Total
scrapping tonnage during the first four months of 2009 (i.e. 2.9 million light displacement
tons) was higher than the scrapping tonnage within the period of three years between
2005 and 2007 (UNCTAD, 2009, pp. 64-70). The ship recycling industry is expected to
get good tonnage up to next 5-10 years due to the deliveries of ships ordered during the
boom period of the shipping market and Amendments in MARPOL Convention for
double hull tankers.
In India, ship breaking activities started in 1983, are carried out in Alang, a
coastal town in the state of Gujarat located on the Gulf of Khambat, 50 kilometres
southeast of Bhavnagar. Ship recycling yards have the advantage of the location as it has
the highest tidal level (10 meters) in the country and the best continental shelf available
for ship breaking in Asia. It is the biggest ship breaking yard in the world carrying on the
24
activity throughout the year on its 182 plots. The high tide facility available to the area
makes it possible to accommodate VLCC, bigger Ro-Ro and container ships which are
beached during high tide and dismantled as the tide recedes. The author visited the ship
recycling site of Alang to have first hand information about the ship recycling activities
done there. Information gathered there could be utilised in the present research paper. The
report of the visit is placed in Appendix-G. As per the report, after the judgement of the
Supreme Court of India vide order 06/09/2007 in a hazardous waste (Blue Lady Ship
breaking) case, safety and waste management is improving gradually in these ship
recycling yards. World Bank in its report (unpublished) also has accepted that following a
string of national Supreme Court cases in India, regulatory authorities are making efforts
to improve the labour and environmental conditions there (World Bank Report, 2010,
Unpublished, p. 2).
In Bangladesh, ship breaking is done at Fauzdarhat sea shore of Sitakunda
Upazilla, extending over 14 kms along Fauzdarhat to Kumira coast. Tankers, cargo ships
and container ships are the three types of vessels preferred by Bangladesh ship recycling
yards for three reasons: availability of lucrative items, relatively safe and easy breaking
operations and secured journey of the vessels to the beaching site. As towing of a dead
ship for scrapping is costly and time consuming, Bangladeshi ship breakers and their
agents generally prefer to buy ships on voyage or ships anchored in Singapore or at a port
near to Chittagong, i. e. located at any port of India, Sri Lanka, Myanmar and Thailand.
The total man-power of the country involved in this industry is around 100,000.
In Pakistan, Gadani situated in the west of the port city of Karachi, is the hub of
ship breaking activities. The workers facing the problem of unemployment, are ready to
work for $2-$3 a day, without safety gear and health plans (Hossain and Islam, 2006, p.
3).
In Turkey, Aliaga is the main ship breaking site on the Aegean coast, 50 km north
of Izmir. Ship breaking in Aliaga started in 1984 as a consequence of liberalization
measures adopted by the Turkish Government. The environmental and working
25
conditions of Aliaga are like other ship breaking countries of Asia except the ban on
import of toxic ships for recycling (Vardar and Harjono, 2002).
In China, ship breaking is done in the docks with the help of cranes and
machinery. Ship breaking is concentrated mainly in the following four yards:
(i) Chang Jiang Shipbreaking Yard, operated by the China National Shipbreaking
Corporation in Jiang Yin, on the Yangtze river, China,
(ii) Zhangjiagang Yuanwang Iron & Steel Co. Ltd, Deji, on the Yangtze river, China,
(iii) Gujing Shipbreaking Company, Xinhui City. Guangdong Province (Joint venture
by Xinhui City and China State Shipbreaking Company), on the Pearl river delta, China,
(iv) Shuangshui Shipbreaking Company, Xinhui City. Guangdong Province, on the Pearl
River Delta, China.
(Hossain and Islam, 2006, p. 3)
3.2 Econometric analysis of the ship recycling market
The econometric analysis of market dynamics and industry trends, done by
Econometric Institute, Erasmus University, Rotterdam, says that the average age of ships
scrapped in Bangladesh is the highest followed by India and Turkey. The ship recycling
market escalated with the rising freight market due to high demand of steel and
Bangladesh came on the top, offering the highest price for scrapping. Table 4 shows the
fluctuation happened in scrap prices in the ship recycling market during the period of
1978-2007.
26
Table 4- Mean age, tonnage and scrap price per scrapping location (1978-2007)
Scrapping Location Age (in years) GRT Scrap Price in US$ /LTD
Africa and Middle East 14.1 7312 240
Bangladesh 26.7 31094 299
China 25.0 29372 196
Europe 20.7 5160 223
India 25.9 16524 221
North America and Pacific 25.5 8615 214
Rest of Asia 15.9 7927 166
Pakistan 24.9 26501 214
South & Central America 21.9 11042 222
Turkey 25.9 7034 195
Unknown 15.3 11320 213
Average 22.0 14718 218
Source: Knapp, Kumar and Remjin, (2007). The Ship Recycling Conundrum: An Econometric Analysis of
Market Dynamics and Industry Trends, p. 8. World Wide Web: repub.eur.nl/res/pub/10878/EI%202007-
52.pdf
Further, as per the econometric analysis, smaller ships are scrapped in Turkey.
Bangladesh and Turkey are the preferred ship recycling destination for the ship owners
from OECD countries. The owners from developing countries prefer Pakistani ship
recycling yards whereas owners from former Eastern block countries go to Turkey.
Regarding flags, the study claims that most of the flag states show positive or negative
effect towards one country. For example, Malta has positive effect to all the ship
recycling states except China and likewise Romania to all except Bangladesh. The top
five flags, showing positive effects to India for recycling of their ships, are Morocco,
Qatar, Cayman Islands, Kuwait and India. For Bangladesh, these five flags are Argentina,
Malaysia, Indonesia, Singapore and India. For China, they are Poland, the U.K., the
Philippines, Romania and Cambodia whereas for Turkey, these are Romania, Italy, Spain,
Canada and Malta. For Pakistan, they are Georgia, Romania, Cambodia, St. Vincent and
27
Greece. In case of main open registries, Malta and Cyprus have positive effects towards
all the ship recycling states whereas Panama, Bahamas and Bermuda have positive effects
towards China only. Turkey is the favourite recycling location for European flags. A few
states like Cyprus, St. Vincent and the Grenadines are the exception showing positive
effects towards all the ship recycling states (excluding Turkey) (Knapp, Kumar and
Remjin, 2008, pp. 1027-1035).
3.3 Existing procedures for ship recycling
Even the principle of ship recycling being a sound one, the existing method
adopted by the ship recycling yards provides no room for safety of human life and the
environment. As per the study reports of NGOs and maritime journals, scrapping of ships
is done on the coast of the sea without any infrastructural facilities polluting the area
through hazardous substances present in the ships. Some countries have not yet made
mandatory the certificate, “gas free for hot works” and the gas tanks not emptied
properly, cause accidents during the work. Workers have no way to escape but to take
such risk for the sake of their livelihood (“Is there a decent”, 2001).
Workers have no proper knowledge about handling of these hazardous substances
which pose danger to their health and the environment. They are doing their job in these
yards bare handed using cutters to dismantle huge parts of the ship into small pieces
without any protection from toxic wastes
3
and steel falling from the cutters. The total
number of workers in the industry is approximately 400,000 having the age-range of 15-
35 years (Lucero-Prisno III, 2005, p. 2). They are poor and migrated, uneducated people
who are compelled to work under the scorching sun on the open beaches without safety
equipment.
It is a fact that ships have hazardous materials4
and toxic wastes like asbestos,
heavy metals, hydrocarbons and ozone-depleting substances. The structural parts of the
vessel contain insulation and asbestos panelling. There may also be cargo and operational

3 Toxic waste is a discarded material that is dangerous to humans, animals and plant life. Toxic waste can
pollute the air, land and water and exposure to it can cause cancer, other illness.
4 A hazardous material is any item or agent (biological, chemical, physical) which has the potential to cause
harm to humans, animals, or the environment, either by itself or through interaction with other factors.
28
residues or items like sludge, lubricants, paints and electrical equipment that potentially
contain harmful substances (Lucero-Prisno III, 2005, pp. 3-12). The typical waste
materials left on board vessels to be scrapped, are shown in Table 5:
Table 5- Average waste materials left on board vessels to be recycled
Waste material Waste (Ton/ship/year) Of which: recycled
or re-used
Of which:
disposed
Asbestos 10.0 95% 5%
Glass wool 7.1 8% 92%
Rubber 0.1 3% 97%
Thermo coal 1.9 41% 59%
Fiberglas 0.1 0% 100%
Rexene 0.1 0% 100%
PVC 0.02 0% 100%
Pipeline 0.03 0% 100%
Cable 0.01 0% 100%
Oily sludge 2.9 n.a. n.a.
Cementing
material tiles
28.6 n.a. n.a.
Iron scaling 2.6 0% 100%
Card board &
packaging
0.1 0% 100%
Glass 0.5 0% 100%
Other toxic
chemicals
0.01 0% 100%
Source: The Ship Recycling Fund: Financing environmentally sound scrapping and recycling of
Sea-going ships. (2005, January), p. 16. https://monkessays.com/write-my-essay/greenpeaceweb.org/shipbreak/fund.pdf
The hazardous materials present in the ship are not to be reused but are required to
be disposed of in a proper manner. The ship recycling yards have neither sufficient
knowledge how to deal with these hazardous materials; simultaneously, nor do they have
29
waste reception facilities. Yards are normally operated on beaches without infrastructural
facilities; therefore, it is very difficult to control the pollution from hazardous materials.
Beaches where ship breaking happens, become graveyards littered with machinery parts
contaminating the land and surrounding water by hazardous materials.
3.4 Occupational hazards and standard procedures for ship recycling
It is true that ship recycling creates job opportunities for people and contributes to
the economic growth of a state, but it exposes the labour force to the risk of death, serious
injury and chronic health problems. Scrapped ships have 95% of steel, coated with
between 10 and 100 tons of paint containing lead, cadmium, organotins (especially TBT),
arsenic, zinc and chromium, depending on the ship‟s size and function. Ships also contain
a wide range of other hazardous wastes, various types of asbestos, PCBs and several
thousand litres of oil (engine oil, bilge oil, hydraulic and lubricant oils, fuel oil and
grease). Hydrocarbons present in this residual oil affect the workers‟ DNA level and
marine life.
Asbestos used in such ships as adhesive, sealing putty or for insulation on pipes
and hull, sound damping or brake linings, have very bad effect on the health of workers
getting exposure during scrapping of the ship. The fine fibres of asbestos inhaled by
workers accumulate in their lungs and cause lung cancer or cancers of the oesophagus,
stomach, colon and rectum. As per the standard practice, all asbestos containing materials
are required to be removed from a ship being scrapped before any activity is carried out.
As per U.S. Environmental Protection Agency (A Guide for Ship, 2000, pp. 2-1 – 2-25),
all asbestos containing materials to be removed must be:
 Adequately wet when removed and must remain wet until collected and contained
for disposal.
 Carefully lowered to the ground without dropping, throwing, sliding or otherwise
damaging or disturbing the material.
 Moved to the ground via leak-tight chutes or containers if removed more than 50
feet above the ground.
According to the Occupational Safety and Health Administration of U.S., there
must be a regulated area for asbestos removal work and only authorised workers should
30
have access to that area. All workers entering and working in this area must wear
approved respirators. Workers should not be allowed to eat, smoke, drink or chew
tobacco or gum in the regulated area. A qualified person should be deputed to supervise
the work conducted in the area. Workers should enter or exit the regulated area through a
three-stage decontamination area.
Polychlorinated biphenyls (PCBs) are used in the ship‟s electrical, heat transfer
and hydraulic equipment due to their non-flammability, chemical stability, high boiling
point and electrical insulating properties. The parts of the ship containing PCBs are:
hoses/rubber and felt gaskets, plastic foam insulation, cable/thermal insulation, silver/oilbased paint, primarily paint on hull steel, foundation mounts and light ballasts. PCBs are
organic chemicals known as chlorinated hydrocarbons. They are toxic and persistent and
are ingested, inhaled absorbed through the skin when workers get exposure to it. PCBs
are stored in the fatty tissues of the body affecting the immune, reproductive and
endocrine systems of the workers. They cause a variety of adverse health effects, such as
cancer in animals, liver damage, reproductive impairment and immune system damage.
The composition of a PCB mixture changes following its release into the environment.
The PCBs bio-accumulating in fish and animals tend to be the most carcinogenic
components of PCB mixture. People ingesting PCB-contaminated fish or animal products
or touching PCB-contaminated sediment, may be exposed to PCB mixture that is more
toxic than the PCB mixture contacted by the workers and released into the environment.
As per the Occupational Safety and Health Administration of U.S., workers
removing or disposing of liquid or solid PCB articles from the ships to be scrapped, are
required to use appropriate personal protective clothing or equipment. That
equipment/clothing must be disposed of as PCB remediation waste. If required, workers
must be provided with approved respirators appropriate for the work being conducted.
There should be facilities for medical surveillance for the workers performing PCB
removal work for a combined total of 30 or more days in a year. There should also be a
training programme for the workers performing PCB removal work under which training
must be provided prior to or at the beginning of the work and at least once a year
31
afterwards in a manner which the workers are able to understand (A Guide for Ship,
2000, pp. 3-1 – 3-19).
As stated above, a huge quantity of paint is applied in the interior and exterior
parts of ships for preservation of the metal from corrosion and prevention of fouling5
. To
prevent fouling, the anti-fouling paint containing TBT (Tributyltin) is used. TBT, an
organic compound, is a hazardous substance causing damage to the marine ecosystem
due to leaching slowly into the sea-water and entering human food chain also. IMO
through the Anti-Fouling-Systems Convention, adopted in 2001, has tried to ban its use
on ships‟ hull but in old ships there is possibility of its use and during the paint removal
exercise, the workers have the risk of exposure to this dangerous compound (Gipperth,
2009, pp. S86-S87).
Paints can be flammable also (in older ships) or may contain toxic heavy metals
like Lead (Pb), Mercury (Hg) and Cadmium (Cd), Chromium (Cr), Zinc (Zn), pesticides
and toxic compounds like PCBs. Lead components, such as Red Lead Tetra-oxide
(PB3O4) and Lead Chromate are used in marine paint. In addition, they are also used in
batteries, generators and motor components. Workers exposed to lead exceeding its
permissible limit (i.e. 50 grams/m3
of air averaged over an eight hours working day)
suffer from health problem like abdominal pain, anaemia, renal disease, headache,
memory loss, learning difficulties and mental retardation (A Guide for Ship, 2000, pp. 6-
1 – 6-17). Mercury affecting the nervous system, causes memory loss, insomnia,
excitability, delirium and skin disorders to the workers getting exposure to it. Further,
mercury consumed by fish contaminates the food chain. Similarly, Cadmium inhaled by
workers causes abdominal pain, diarrhea, chest pain and respiratory failure (Hossain &
Islam, 2006, p. 12). Sometimes a paint or preservative coating is inflammable and may
catch fire in the areas to be heated during cutting. Therefore, these coating are to be
removed before heating the surface to prevent ignition and should be burned away under
controlled conditions.

5 The marine organisms when attach to the hull of a ship during sailing, the process is called fouling. It can
reduce the speed of the ship and increase the fuel consumption. Fouling can also cause introduction of
invasive species in the ecosystem and to prevent it, anti-fouling paint containing TBT is used on the hull of
the ship.
32
Some ships sold for scrapping contain diesel fuel, fuel oil, natural and synthetic
oils used as lubricants and hydraulic oil. There is a chance of fire due to presence of oil
and fuel on these ships. Besides, some crude oil and high-end products are highly toxic
and exposure to this toxic oil/fuel through dermal contact or through contaminated water
or inhalation of fumes/particles, can cause damage to the liver, lungs, kidney, heart or the
nervous system (“A Guide for Ship”, 2000, pp. 5-1 – 5-37).
Removal/Disposal of wastewater, specially bilge water6
and ballast water7
is
also an important activity to be done during ship scrapping. If not conducted properly, it
has an impact on the environment and on the health of the workers exposed to it. Bilge
water consists of stagnant, dirty water and other liquids allowed draining to the lowest
inner part of a ship‟s hull. It may contain pollutants, such as oil and grease, inorganic
salts and metals like arsenic, copper, chromium, lead and mercury. Similarly, ballast
water, specially compensated fuel ballast8
and dirty ballast9 may contain residual fuel,
fuel additives (like biocides to control bacterial growth in the fuel oil), oil and grease,
petroleum hydrocarbons and metals like copper, nickel, silver and zinc. Metals contained
in bilge and ballast water can not be removed through treatment or environmental
degradation and if ingested, can cause various health problems like lead-poisoning and
cancer. Bilge water sometimes contains toxic organs e.g. solvents or PCBs which may
cause cancer or lead to other serious ailments like kidney/liver damage, anaemia and
heart failure. Bilge water containing oil and fuel can interfere with plant life and the
animals‟ respiration or can poison the fish and other marine organisms as well. Besides,
ballast water containing micro-organisms and pathogens transported and discharged into
port/coastal waters sometimes causes significant changes to the ecosystem, upsets the

6 Bilge water is a mixture of fresh water, sea water, oil, sludge, chemicals and various other fluids
accumulated in bilge wells.
7
Ships use water as ballast to adjust their position in the water to improve their manoeuvrability and
stability.
8
Sea water that is taken in by the ship as a replacement to the fuel for maintaining its stability, is called
compensated fuel ballast.
9 When the sea water is pumped into empty fuel tanks for the purpose of increasing ship stability, it mixes
with residual fuel and produces dirty ballast.
33
ecological balance and finally causes economic loss to the area. Before scrapping the
ship, onboard water must be tested to determine pollutant concentration prior to transfer
onshore/discharge. Prior to discharge, waste water treatment should be done to remove
certain pollutants (“A Guide for Ship”, 2000, pp. 4-1 – 4-48).
Apart from the hazardous and toxic materials present in the ship, metal cutting
also causes health problems to the workers performing it. As stated above, ships have
95% of steel which is removed during its scrapping by cutting it into pieces using a
variety of torches and mechanical cutters. The existing process adopted by ship recycling
yards for metal cutting and scrap metal management poses a threat to the environment as
well as workers‟ health and safety. During the ship scrapping, upper decks and systems of
the ship are cut first, followed by the main deck and lower decks. After cutting, the larger
parts of the ship are lifted by cranes to the ground where they are further cut into smaller
shapes and sizes as per the requirement of the buyers. For cutting these ferrous and nonferrous (bronze, brass and various other copper alloys) scrap, different types of torches
and mechanical cutters are used. Oxygen-fuel torches operating with a flame temperature
of 3,500 degree – 4,000 degree Fahrenheit and flame velocity of 290 – 425 feet / second,
are used for cutting steel. It burns a wide variety of fuel such as acetylene, propane,
butane, fuel gas or natural gas and uses oxygen (liquid or compressed) or liquid air as
oxidizer/cutting gas that serves to burn (oxidize) iron along the cut-line. Electric arc or
plasma arc torches which are able to generate temperature high enough to liquefy almost
any metal by the discharge of electric arc, are used for the metals not suitable for cutting
with oxygen-fuel torches. For making large metal parts to small dimension suitable for a
melting furnace, shears are used. Saws with circular/reciprocal blades are used for cutting
nonferrous metals.
Torch cutting generates large amounts of fumes of the materials like manganese,
nickel, chromium, iron, aluminium, asbestos and lead as particulates. As mentioned
above, cutting torches themselves generate oxides of nitrogen (NOx) and sulphur (SOx)
and the process of combustion produces carbon dioxide and carbon monoxide. These
contaminants inhaled by the workers from air, metal fumes, particulates and smoke, can
cause poisoning and long-term damage to their central nervous system. Further, there is a
34
possibility of soil/water contamination, primarily from lead, if scrap metal or other waste
generated from metal cutting, are not properly stored or disposed. In case of exposure of
metal scrap/waste with storm water, the water contamination is possible from the metal
waste and contaminants from the scrap. Therefore, yards must fix the exposure limit for
various contaminants considered toxic. The maximum exposure limits fixed by U.S.
Environmental Protection Agency for contaminants are shown in Table 6:
Table 6- Maximum exposure limits for contaminants
Contaminants 8-hours time-weighted average
Chromium metal 1 mg/m3
Nickel 1 mg/m3
Particulates not otherwise
regulated
15 mg/m3
Lead 50 g/m3
Cadmium 5 g/m3
Source: A Guide for Ship Scrappers: Tips for Regulatory Compliance, 2000, p. 7-6
Hot work in ships also causes accidents mostly due to lack of care on the occasion
of scrapping. Therefore, before performing hot work in certain confined or enclosed
space or any dangerous atmosphere or pipeline, it should be tested and certified by a
marine chemist as “safe for hot work”. Hot work should not be performed in or on the
spaces or other dangerous atmosphere (e.g. dry cargo hold, bilges, engine room and
certain boiler spaces, vessel sections and landside confined and enclosed spaces) unless
they have been tested by the competent person and determined to contain concentration
of flammable vapours or gases within the permissible limit. Workers performing any type
of metal cutting, should wear suitable eye protective equipment as well as appropriate
hand and body protective clothing or equipment.
If the noise level produced by metal cutting machine is above 100 decibels, efforts
should be made to make it feasible to reduce it below the maximum limit. If not feasible,
then workers should be provided personal protective equipment. Metal cutting should be
35
performed in a confined space having sufficient ventilation and required means of access
to the space for the workers. Workers cutting the metals containing toxic materials must
wear filter type respirators. (“A Guide for Ship, 2000”, pp. 7-1 – 7-14).
3.5 Gap between existing and standard practices of ship recycling
Ship recycling is really an action of hazardous waste disposal and needs to be
done properly i.e. under standard procedures. If done as per the standard procedures
explained above in detail, the cost of scrapping becomes expensive and the business
becomes unprofitable due to low margin and high competition in the ship recycling
industry. The ship owners/ship brokers/cash buyers finalise the deal with the ship
recycling yard offering the highest price in the international/global market. Ship recycling
yards running with marginal profit in the volatile and competitive market, are not ready to
make investment for the long term but they are trying to take advantage of the existing
ship recycling market. The market always has the probability to shift to a new destination
in case of regulations enforced strictly by the ship recycling states or due to any other
influencing reason. If the existing ship recycling states ratify the IMO‟s Ship Recycling
Convention, 2009, even then no one can guarantee to achieve the ultimate goal of green
ship recycling due to probability of shifting the industry elsewhere. If the industry shifts
to states like Somalia then the situation can be worse.
As explained above, ships contain hazardous materials and toxic waste.
According to the first law of thermodynamics, a pollution-free product is not possible and
economic activities are possible only at the cost of the environment. The industry has to
make a balance between the two: ecology and economics (Ma, 2002, p. 400). As more
than 90% of world tonnage is carried through the sea, it is impossible to think about the
global trade without shipping having the cheapest transportation cost for bulk cargo and
the least pollution among all the modes of transport. But shipping sector has not done
efforts sufficiently to control the pollution in comparison to air traffic and road transport.
The pollution from ships needs to be controlled to have a good balance up to a possible
extent and International Maritime Organisation (IMO) is making efforts in this regard for
36
last four decades. Hong Kong International Convention on Ship Recycling, 2009 is in line
with it.
Ship recycling can be said to be an externality as it poses danger to human life
and the environment. As this externality is negative and not possible to be compensated
for, the external cost needs to be paid for in the form of compensation. In the present
situation, ship owners are ultimately responsible for scrapping of their ships and they
should bear the external cost for this negative externality in the form of compensation.
But in actuality, in place of paying the external cost for internalising the negative
externalities, ship owners are getting money for their ships to be recycled. As they are
ultimately responsible for disposal of hazardous materials and toxic wastes present in the
ships, they should be asked to bear the difference between the costs under existing
procedures of scrapping and standard procedures explained above in detail. In developed
countries, such system already exists for disposal of many wastes like computers/cars.
For dismantling such wastes through standard practices, the owner has to pay the cost. In
Germany, the process is initiated on the occasion of registration of a new car to arrange
the fund for its green dismantling at the end of its economic life. For achieving the goal
of green ship recycling such steps can be taken.
Further, it can be said that even the external cost compensated by the ship owners
will be a compromise with the loss to the human beings and the environment. But for the
sake of economic activity, internalization of such negative externalities can be accepted.
However, the “Lawrence Summers10” criterion should not be applied for the toxic waste
trade like ship recycling. As per this criterion, the pollution should be sent to the places
where there are no people or where the people are poor since it will have the lowest cost
in the countries having lowest wages (Demaria, 2010, p.251). This principle of lowering
the internalization cost of externalities does not match with the principles of economics of
safety and environment. As per the principles of economics of safety and environment,
efficient allocation of resources can not be left to the market (Ma, 2002, pp. 404-405).
Out of the three main approaches suggested to deal with externality problem, the proven

10 Lawrence Summers, the then chief economist at the World Bank in 1991.
37
method of intervention through appropriate rules and regulations, appears the best choice
for managing the negative externalities of ship recycling. The maritime sector being
international, inter-governmental organisations should come forward with a permanent
solution to achieve the ultimate goal of green ship recycling. The issue will be discussed
further in the fifth chapter after analysis in the third chapter, of the guidelines issued by
international organisations on the subject.
38
CHAPTER-4
Regulations/Guidelines on ship recycling
4.1 The environmental issue: Ship recycling
The shipping sector has a great role in globalization of the world trade. Provision
of logistics facilities and clustering of industrial units in the vicinity of ports are the best
example showing its importance. The share of transportation cost in the total cost of a
product has now increased due to transportation of unfinished goods from one place to
another before finishing; on the other hand, the share of production cost has declined by
availing the comparative advantage for a product. To manage the growth in maritime
transportation due to decentralization of industries, the world merchant fleet increased
rapidly. But this increase in the world fleet affected various issues like safety of life and
the environment. During the last two decades, environmental issues have taken on a new
level of recognition on the international platform. The issues like ship recycling, air
pollution due to emission of sulphur and carbon dioxide from ships and ballast water
causing ecosystem imbalance, drew attention of the world. The Basel Convention, 1989,
the Vienna Convention, 1985, ILO‟s Conventions on Occupational Safety and Health,
Asbestos, Chemicals and MARPOL, 1973/1978 are some examples of awareness about
the safety of human beings and the environment. The controversial cases of ship
recycling like the Otapan, the Sea Beirut, the Sandrine, the Margaret Hill, the Tor Anglia
and the Onyx, drew the attention of international organizations and NGOs towards transboundary movements of hazardous materials affecting the human and environmental
safety. IMO which is primarily concerned with human safety and the environment, has
already taken initiatives for environmental safety, health and welfare matters relating to
the ship recycling industry. Guidelines in this regard have been issued from time to time
by the Organization. The IMO Marine Environmental Protection Committee at its fortysecond session (MEPC 42) in 1998 agreed that IMO has an important role to play in ship
recycling, including preparatory work before commencement of ship recycling and a
coordinating role towards the ILO and the Basel Convention in recycling matters
(Mikelis, 2006, p. 2).
39
4.2 Adoption of the Hong Kong Convention, 2009
For proper implementation of the regulations by the contracting states for safe,
sound and environmentally friendly recycling of ships, the IMO has adopted the
International Convention on Safe and Environmentally Sound Recycling of Ships, 2009
in its Diplomatic Conference held in Hong Kong on 11 May, 2009. The European Union
and many other countries widely welcomed the Convention as it reflected the
responsibility of ship owners just from the time of construction of the ship to its
demolition along with various actions required to be approved by the flag states and
authorities in ship recycling nations for monitoring of recycling activities. Particularly the
handling of hazardous materials from the construction to demolition stage has been
appreciated. It has been found a good attempt of IMO towards human and environmental
safety as it has taken the issue on the international platform for its proper recognition by
the countries not serious about the issue (“The Hong Kong ship”, 2010, p. 23).
The Convention explains about the Environmentally Sound Management (ESM)
of hazardous materials on board ships. Regulations 20.3 and 20.4 of the Convention
cover the issues like ensuring safety and ESM of all hazardous materials and wastes,
identifying waste management and transfer of wastes to the authorised management
facilities (Wingfield, 2011, p. 11). The relationship of the Ship Recycling Convention
with other international conventions/agreements has been covered under Article-15. As
per the provision of Article 15.1, the Convention shall not prejudice the rights and
obligations of any state under the United Nations Convention on the Law of the Sea
(UNCLOS) and under the customary international law of the sea. Similarly, as per Article
15.2, the Convention shall not prejudice the rights and obligations of parties under other
relevant and applicable international agreements.
40
4.3 Hong Kong Convention and its enforcement
The Convention was open for signature by any state at the Headquarters of the
Organization from 1st September, 2009 to 31st August, 2010 and shall now be open for
accession by any state. Till now sixty states have signed the Convention including
Turkey, one of the five main ship recycling states (Beck, 2010, p. 1). The Convention
shall enter into force 24 months after the date on which the following conditions (Article17) are met:
(i) not less than 15 States have either signed it without reservation as to
ratification, acceptance or approval, or have deposited the requisite instrument
of ratification, acceptance, approval or accession in accordance with Article
16;
(ii) the combined merchant fleets of the States mentioned in point (i) above
constitute not less than 40 per cent of the gross tonnage of the world‟s
merchant shipping (i.e. at least 383,192,922 GT considering the gross tonnage
of 2010 which is 957,982,304 GT); and
(iii) the combined maximum annual ship recycling volume of the States mentioned
in point (i) above, during the preceding 10 years constitutes not less than 3
per cent of the gross tonnage of the combined merchant shipping of the same
States (i.e. at least 11,495,788 GT for the period 2001 to 2010).
[The Hong Kong International Convention for the Safe and Environmentally Sound
Recycling of Ships (2009)]
The first two conditions of the Convention are easy to be fulfilled as European
Union members and the OECD members have consensus to sign and enforce the
Convention. The combined maritime merchant fleet of these states (European Union
having 23% of total world tonnage) constitutes at least 40% of the world‟s total merchant
fleet (Chang, Wang & Durak, 2010, p. 1395). To fulfil the third condition, the main ship
recycling states, recycling 97-98% of the world‟s total recycling tonnage, have to come
forward to ratify the Convention. As mentioned above, out of the five main ship recycling
states, Turkey has signed the Convention. But the larger recycling capacity exists with
41
China (7.7 million GT), India (7.6 million GT) and Bangladesh (6.8 million GT),
Pakistan having medium (2.4 million GT) and Turkey having the smallest capacity (0.7
million GT) (Mikelis, 2010, pp. 28-29). After 24 months from the accession by the two
large recycling capacity states out of the three, the Convention can enter into force. China
has initiated action for standardization of its recycling activities and new yards with
appropriate infrastructural facilities are either under construction or have already been
completed. It is expected that China may ratify the Convention early. But India and
Bangladesh may take some time to ratify the Convention, which will cause delay in the
enforcement of the Convention anticipated by 2015 at the earliest (“Study in relation”,
2009, p. 6).
As the conditions for entry into force of the Convention will take some time, IMO
member states have been requested (by Resolution 5 of the Hong Kong Diplomatic
Conference, see Appendix A) to consider applying the technical requirements of the
Convention during the interim period (Mikelis, 2011, pp. 4-11). For implementation of
the technical requirements voluntarily by the ship recycling states, IMO is continuously
making efforts to have discussion between the ship recycling facilities and the states
concerned. The Pattaya Workshop organized in May, 2010 is an effort in this direction,
which was represented by the Ship Recycling Associations and Administration from the
main five ship recycling states, International Ship Owners‟ Associations along with the
experts from UN bodies, IGOs and NGOs (Mikelis, 2010, p. 33). The voluntary
implementation of technical requirements proposed under the Convention has been
welcomed by the International Ship Owners‟ Associations like ICS, BIMCO,
INTERTANKO and their ships joining the fleet, have started to maintain the Inventory of
Hazardous Materials in line with the provision under the Convention.
42
4.4 Structure of the Convention
The Convention can be divided into three parts: the first part containing 21
Articles establishing the main legal mechanism, the second part having 25 regulations
explaining technical requirements and the third part containing appendices. Regulations
can be divided into four parts as follows:
(i) General provisions (Regulations 1-3): Under the general provisions, the
definitions of the terms used, general applicability of the provisions and
relationship with other standards, recommendations/guidelines issued on the
subject, have been covered.
(ii) Requirements for ships in service (Regulations 4-14): The states, party to
the Convention have been assigned the responsibility to ensure that the
hazardous materials listed in Appendix-1 of the Convention (see Appendix B)
are not utilized by their shipyards. Along with ensuring the above, the party
states have also to ensure that these hazardous materials are not installed on
their ships. All their ships will have to carry throughout their operational life,
an Inventory of Hazardous Materials (IHM) quantifying the materials listed in
Appendices 1 & 2 of the Convention (Appendix 2 of the Convention, see
Appendix C). In case of installations of the materials listed in Appendix-2 of
the Convention, the Inventory of Hazardous Materials is to be updated. After
each 5 years, the ships of the party states will undergo a survey to verify their
IHM quantity and then issue an International Certificate on Inventory of
Hazardous Materials. Further, it is binding on the flag states, party to the
Convention that their ships will be recycled in the recycling facilities of the
party states only.
(iii) Requirements for ship recycling facilities (Regulations 15-23): The
ship recycling facility selected by the ship owner should be a facility
authorised by a party state, capable of handling the hazardous materials
shown in the IHM of the ship. After receiving the ship recycling plan from
the ship recycling facility11, the ship owner has to arrange the final survey of

11 A defined area that is a site, yard or facility used for the recycling of ships.
43
the ship for verification of the Inventory of Hazardous Materials and the Ship
Recycling Plan for disposal of hazardous materials shown in the inventory,
before obtaining the International Ready for Recycling Certificate from the
flag state.
A Ship Recycling Facility Plan is to be developed and
implemented by the Ship Recycling Facility. This plan will cover workers‟
safety and training, protection of human health and the environment, role and
responsibilities of personnel, emergency preparedness and response, systems
for monitoring, reporting and record-keeping. The Ship Recycling Facility
will be authorized by the state, party to the Convention, and validity of the
authorization will be maximum 5 years. Ship Recycling Facility will have to
accept those ships only that are authorized to be recycled and also meet the
requirements complying with the Convention.
After finalization of a deal with a ship owner, the Ship Recycling
Facility has to develop a Ship-specific Recycling Plan on the basis of the
information provided by the ship owner. Then, a notification containing the
name of the Competent Authority for intent of the Ship Recycling Facility and
details of the ship, its owner, Inventory of Hazardous Materials and the draft
Ship Recycling Plan, is be issued by the Ship Recycling Facility. The Ship
Recycling Plan prepared by the Ship Recycling Facility will then be approved
by the Competent Authority concerned before handing it over to the ship for
its final survey. After final survey, the ship will acquire the International
Ready for Recycling Certificate, which will be submitted to the Ship
Recycling Facility. Then, the Ship Recycling Facility will report to its
Competent Authority about the planned start of recycling.
(iv) Reporting requirements (Regulations 24-25): The ship recycling state, a
party to the Convention, has to make regulations conforming to the provisions
made in the Convention. The state has to designate one or more competent
authorities who will develop a mechanism for authorizing ship recycling plans
and ensuring compliance of the Convention.
44
In the last part of the Convention, there are 7 appendices containing lists of
hazardous materials, formats for certification and document of Authentication to
undertake ship recycling (Mikelis, 2010, pp. 14-23).
4.5 Analysis of the Convention
As explained above, the Hong Kong Convention has been appreciated as a right
approach to control the use of hazardous materials in ships but as per the critics, two
aspects could not be covered properly under the Convention i.e. beaching and precleaning. In support of beaching, IMO has argued that 75% of world ship recycling is
done on beaches; therefore, in place of taking up the beaching issue, ship recycling
activities have been focused upon. The Convention has the intention to standardise ship
recycling throughout the world by concentration upon human safety and environmental
aspects through proper training of workers, implementation of safety measures and their
monitoring along with the record management to be done by the authority appointed by
the party state.
Regarding pre-cleaning work, critics say that it should be the responsibility of the
flag state to first do the pre-cleaning work and after removing all the possible hazardous
wastes, the ship is to be handed over to the ship recycling yards. The NGOs are taking the
example of the chemical tanker (Otapan principles) which spent nine years in the
Netherlands and was pre-cleaned before the final voyage to Turkey. NGOs are calling on
the flag states to follow this precedence and make ship owners liable for breaking of
ships. Further, it has been stated that Regulation 20 (read with Regulations 10 &11) of the
Convention mentions safe and environmentally sound management of hazardous
materials but it does not clearly mention the place where pre-cleaning work will be doneeither in the exporting country or importing country. As importing countries for recycling
of ships are lacking in handling hazardous materials in terms of technical and mechanical
facilities, pre-cleaning work has been suggested by the critics to be done in the exporting
countries.
45
On the contrary, it has been argued by the IMO that after pre-cleaning of the
hazardous materials, the ship becomes unseaworthy and then it will perhaps not be
feasible to tow away the ship a good distance for recycling in Asian countries. As stated
in the Convention, pre-cleaning work can be done at the facility capable and authorized
for the Inventory of Hazardous Materials of a ship (Mikelis, 2010, pp. 35-37). This
provision may encourage the ship recycling facilities to make them capable of precleaning activities to avoid the risk of customer loss. But pre-cleaning work at the ship
recycling facilities attracts the controversial issue of trans-boundary movement of
hazardous materials used in ships.
The issue of hazardous materials and its movement is a hot topic for debate on
international platforms for a long time. The Basel Convention, adopted under the United
Nations Environmental Programme in March, 1989 deals with trans-boundary movement
of hazardous wastes but not directly related to ship recycling. The Convention covers
Environmentally Sound Management (ESM) of hazardous wastes (Article-4) such as
minimising generation of hazardous wastes, availability of adequate waste disposal
facilities, prevention of pollution and minimising the consequences on human health and
the environment, authorising the disposal of hazardous wastes (Wingfield, 2011, p. 12).
The exporting state has been considered responsible under Article 2(10) of the
Convention for the planned trans-boundary movement of hazardous wastes. The aim and
objectives of the Convention are as follows:
(i) To reduce trans-boundary movements of hazardous wastes and other
wastes ;
(ii) To dispose of the hazardous wastes and other wastes generated, as close as
possible to their source of generation;
(iii) To minimise generation of hazardous wastes in terms of quantity and
hazardousness;
(iv) To ensure strict control over movements of hazardous wastes across
borders;
46
(v) To prohibit shipments of hazardous wastes to countries lacking the
capacity to manage and dispose of in an environmentally sound manner;
(vi) To Help developing countries in the environmentally sound management
of hazardous and other wastes generated by them.

The hazardous wastes which are explosive, flammable, poisonous, infectious,
corrosive and toxic/eco-toxic are covered under the Convention. The
polluter/generator12/owner of the hazardous wastes is considered responsible for its safe
disposal under the Basel Convention.The Convention prohibits its parties to send
hazardous wastes to be recycled to the non-OECD states. If a ship to be recycled is
considered as hazardous waste, prior notification and consent is required for its transboundary movement, as per the Convention [Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, (1989)]. There are 177
countries party to the Convention, including Iraq and Palau, the recent members. Till
now, 70 parties have ratified the Ban Amendment to the Basel Convention, Zambia being
the most recent and 10 parties have ratified the Basel Protocol on Liability and
Compensation (Basel Convention Bulletin, 2011, p. 6). All the members of the European
Union, party to the Convention have decided through Council Decision 97/640/EC not to
export the hazardous wastes to non-OECD states (“UK Ship Recycling”, 2007, p. 27).
The European Union appears to prohibit its ships to recycle in Asian countries unless it
has pre-cleaned hazardous materials. In line with the Basel Convention, United Nations
Human Rights Commission, set up in 1995, adopted a resolution on adverse effects of
hazardous wastes. Further investigation was done by the Commission on the subject and
in its report ship recycling was considered as waste trafficking and it was suggested to
consider ships as hazardous waste (Hossain and Islam, 2006, p. 42).
On the contrary, the Hong Kong Convention does not consider the ship ready for
recycling as hazardous waste. As stated above, the issue of considering ships ready for

12 “Generator” means any person whose activity produces hazardous wastes or other wastes or, if that
person is not known, the person who is in possession and/or control of those wastes- Basel ConventionArticle-2.
47
the last voyage, as a hazardous waste, created controversy and parties on different footing
interpreted it differently. Without going into this controversy, it is a fact that the
responsibility for disposal of hazardous materials present in ships lies with the ship
owners and it is the responsibility of the ship owners to ensure that their ships are
recycled in a manner complying with the standard practices prescribed under
international rules and regulations/conventions. The International Chamber of Shipping
(ICS) has taken initiatives in this regard and in August, 2001, established an Industry
Code of Practice on ship recycling. The aim of the Code is to encourage ship
owners/shipping companies to initiate a programme to identify and record the hazardous
materials on their existing ships and to minimize the amount of potentially hazardous
materials on board the ship (Parkinson, 200513). The International Labour Organisation,
the first specialised agency of the United Nations focusing on labour rights, has also put
emphasis on minimum utilisation of hazardous materials on board the ships (Hossain and
Islam, 2006, pp. 41-42).
The steps taken by ICS and ILO towards minimum utilisation of hazardous
materials are really helpful in achieving the target of green ship recycling but it will have
an impact in the long run i.e. after 20-25 years. To tackle the present situation prevailing
in the ship recycling industry, immediate concrete steps need to be taken. The European
Union is very keen on finding a solution to this problem and from time to time
resolutions are passed by them to make the efforts successful. As stated above, ships
registered in European Union member states (party to the Basel Convention) would be
prohibited for recycling in the Asian ship recycling facilities unless they are considered
non-hazardous after pre-cleaning or they change their flags. As selling of ships is a purely
commercial decision, there is always a possibility that the ship owners change the flags of
their ships for a better deal. By choosing the flag of a state not party to the Convention,
the ship owner will then be free to sell his ships to any ship recycling facility to get the
best price.
Even after the entry into force of the Ship Recycling Convention, there is a
possibility of two distinct ship recycling markets running parallel, one i.e. conventional

13 Page number not available but placed as executive summary after the slides.
48
market for the ships which comply with the Ship Recycling Convention and another i.e.
non-conventional market for ships not complying with the Ship Recycling Convention
(Knapp, Kumar and Remjin, 2008, pp. 1023-1024). As green ship recycling is always
expensive requiring standard methods along with proper infrastructure and trained
workers with appropriate equipment, the ship owners may shift to the non-conventional
market defeating the purpose of the Hong Kong Convention.
There may also be the scene that many states do not ratify the Hong Kong
Convention to favour their ship owners. Then the non-conventional market will definitely
be bigger than the conventional market which will not only be detrimental to the human
being but also to the environment. If the major ship recycling states like Bangladesh,
India and Pakistan do not ratify the Hong Kong Convention, then also the possibility of
the non-conventional market being bigger than the conventional market can not be
ignored.
As explained earlier, even after formulation of the guidelines from time to time on
ship recycling, the target of green ship recycling could not be achieved but the market
could shift from one place to another. The „Industry Code of Practice on Ship Recycling‟
introduced in August, 2001 by Ship Owners‟ Associations and led by ICS, could not get
the expected result either. In this open world market, ship owners are not ready to bother
about the recycling activities after selling their ships, but they are only interested in the
best price of their ships. Sometimes they even do not know where their ships have gone
for recycling as buyers of these ships for recycling are normally the cash buyers who
finalise the deal with the ship recycling yards.
On the other hand, ship recycling yards are always keen on earning the maximum
profit from the business. They are ready to ignore even the safety rules and regulations
issued on the subject by the state concerned. Ship recycling states either do not have
sufficient guidelines/regulations on the subject or do not have strict implementation of the
existing regulations. The Ship recycling industry is flourishing in such states having
cheaper man-power. After strict compliance with the regulations, the activity becomes
costlier in comparison to the parallel markets, so the industry starts shifting to the
destination that is favourable for profit earning.
49
All the developments in the past indicate that there is a permanent solution
required to tackle the status quo situation of the ship recycling industry for the past three
decades. Ship owners are the prime stakeholders responsible for disposal of hazardous
materials existing in their ships, as per Article-2 of the Basel Convention. But as already
discussed, they are not willing to accept such burden. Monitoring of the activities of ship
owners by any international organisation is also a difficult task.
Further, green ship recycling is always costly and there is no incentive for opting
such standard practices requiring investment on infrastructure, training and equipment. In
the USA and Europe, income from the ship‟s scrap is not even sufficient to meet the
expenditure on ship recycling (Finn, 200514). The European Council is planning to
generate a fund to meet the expenditure on green ship recycling (“Study in relation”,
2009, pp. 6-7). For disposal of vehicles, Germany has created a fund, starting
contribution from the stage of registration of the vehicle. In case of ships‟ recycling also,
such arrangements can be done. In real sense, the ship at the end of its life is nothing else
than waste and like other wastes, the honour/generator of this waste should take care of
its disposal in a standard manner. If they are not in a position to do so directly, they can
develop a system to run it properly. For example, to protect themselves from the
enormous liability due to collision of the ships, ship owners established the „Protection
and Indemnity Insurance Club‟ (P & I Club). The P & I Club is a non-profit making
mutual insurance association providing coverage for its ship owners and charter members
against third party liabilities relating to the use and operation of commercial vessels. This
development could be initiated after the judgement of the collision case, „D Vaux v
Salvador‟ given by an English court in 1836 that the ordinary policy against perils of the
sea can not cover the damage done to another vessel by collision (“The story of P& I”,
2011). It can be derived from the example that after getting a bigger liability, ship owners
formulated a system i.e. P & I Club to tackle such liabilities. If ship owners are also made
responsible for green recycling of their ships, there is a possibility of evolving a new
system improving the situation. A club/society constituted by the ship owners can do the
job in an efficient and effective manner with the help of a „Ship Recycling Fund‟

14 Page number not available but placed as executive summary after the slides.
50
proposed to be created to meet the additional financial burden due to green ship recycling
practices. A detailed discussion will be done on this proposed line of action in the next
chapter.
51
CHAPTER- 5
Ship Recycling Fund: An Incentive Scheme
5.1 Background
Maritime transport is a derived demand from world trade. Transportation of goods
from one place to another is needed to facilitate the trade. As stated in the first law of
thermo-dynamics, a product can not be pollution-free totally and maritime transport also
is not an exception. But for taking the benefit of transportation, the world has to accept
the pollution generated by it. One thing that can be done, is the selection of the best
option to minimise the pollution. Among all the modes of transportation, shipping is the
cheapest and most eco-friendly mode for bulk cargo and acquisition of ships is required
for transportation of goods/cargo through this mode. Ships are required to be disposed of
at the end of their economic life. As ships contain different types of hazardous materials,
on the occasion of scrapping these materials need due care and proper handling. The
hazardous effects of these materials on human being and the environment can be
minimised by following the standard procedures of recycling.
Due to the pollution caused to the environment and threats to the human being,
ship recycling is considered as a negative externality. As per the market principles, to
internalise this negative externality, a provision of compensation is needed. In place of
paying the compensation to the ship recycling facilities for internalizing such a negative
externality, ship owners are getting money for their ships. Ship recycling yards are paying
the money with the intention to scrap the ships in a sub-standard manner. The owners of
the ships also know about this; in other words, they are not serious about green recycling
of their ships. They know that in case of recycling of their ships in a standard/proper
manner they can not get a penny from the sale of their ships but they might have to pay
even money to the yards. It would not be wrong to say that ship owners intentionally
show unwillingness in the green method of recycling to get money from the sale of their
ships to be recycled. As stated above, ship owners, not the ship recycling facilities, are
the owners/generators of the hazardous materials and toxic wastes received under the
process of ship recycling and to internalise this externality, they should pay the
52
compensation to the ship recycling facilities/states concerned. Payment of money by ship
recycling yards in place of the compensation for internalising this negative externality, is
really against the „polluter pays‟ principle. As per the Basel Convention, ship owners
being the owner/generator of hazardous materials and toxic wastes used in ships, are
supposed to monitor its disposal by the ship recycling facilities in a proper way. It can
therefore, be said that ship owners are the key stakeholder for green ship recycling and
initiatives taken by them will have great impact on the industry. If they are assigned the
responsibility of green recycling of their ships and provision is made for submission of
such certificate by them compulsorily after completion of pre-cleaning and recycling
exercise, then the scenario will definitely change.
The guidelines/conventions issues from time to time on ship recycling ask about
the procedure to be followed by the stakeholders but neither the owners of the ships, nor
the ship recycling yards are following the procedures laid down in these
guidelines/conventions. Before adoption of the Hong Kong Convention by the IMO, there
were guidelines issued by the international organisations from time to time for the
stakeholders i.e. ship owners, flag states, ship recycling facilities and concerned states,
but the stakeholders are not willing to comply with these guidelines. Even after
enforcement of the Hong Kong Convention, it is not confirmed that the stakeholders of
the industry will follow the procedures indicated under the Convention. Therefore, along
with formulation of conventions/guidelines on the subject, it is required also to analyse
the response from its stakeholders on such conventions/guidelines. It is a fact that even
after the guidelines on the subject, the situation has been status quo for a long time, which
suggests the need to thoroughly investigate to find its root cause together with the
solution.
5.2 Cost a barrier in green ship recycling
As appears prima facie, the cost difference between the conventional and standard
methods of ship recycling is the main barrier in achieving the goal of green ship
recycling. The standard procedure of recycling causes additional expenditure in scrapping
exercise; as a result, the profit margin of ship recycling facilities is reduced which also
53
affects the ship owners, getting a lower price and sometimes no money for their ships to
be recycled. As there is no incentive available to cover the gap between the cost of
conventional and standard methods of recycling, ship recycling industry is not willing to
opt for the standard method. As discussed earlier, ship owners also are interested in the
money to be received from the sale of their ships to be recycled. To make the standard
method of recycling acceptable by the ship recycling industry, a fund needs to be
arranged for the provision of incentive to meet the additional cost to be arisen due to
standard methods of green ship recycling. The additional cost due to the standard method
of recycling has the following elements:
(i) The cost involved in removal of structural components requiring special
treatment:
The cost for each of the elements of scrapping is different for different types
of ships. Further, the actual cost separately for such elements, is difficult to
know as most of these activities are done simultaneously on the occasion of
scrapping. Ship recycling yards are not ready to calculate separately the
expenses under each head and disclose the same. As per the report prepared in
April, 1998 by US Ship Scrapping Inter-agency Panel, an amount of US$145
million was required for scrapping of 111 US Navy vessels. Out of US$145
million, the expenditure on removal and disposal of the structural components
had been estimated at US$110 million (average US$1 million per ship).
ECORYS, a consultation company conducting a study on ship breaking
for the NGO, Greenpeace, also has taken the figures from a ship owner opting
for pre-cleaning before scrapping of the ship in a Chinese yard. According to
this source, the total pre-cleaning cost was in the order of US$20-40/Light
Displacement Ton (LDT) including the expenses on removal of structural
elements of the ship. Taking the ratio the same as shown for US Navy
vessels, the expenses on removal of structural elements from ships comes to
US$15-30/LDT. A U.S. ship yard, involved in scrapping of ships in a
standard manner, has also confirmed this cost estimated for different types of
ships as follows:
54
War ships US$ 900-1300 per LDT*
Military support vessels US$ 300- 700 per LDT*
Commercial vessels US$ 100- 500 per LDT*
*Including both remediation (removal and disposal of hazardous wastes) and
dismantling costs. Remediation cost estimated at one-third to half of the total
cost includes labour, materials and disposal costs.
(ii) The cost of removing operational waste generated within ship’s
operational period:
Under this heading, the expenditure on making the ships for hot work by tankcleaning or making it gas-free, costs for removal of engine room wastes,
hydraulics, are to be considered. This expenditure has been estimated to onethird of the total pre-cleaning work. In container ships, the cost has been
estimated at US$ 5-10/LDT. Tankers and liquid bulk carriers have
considerably higher costs.
(iii) The cost involved in improving the capacity of the ship recycling yards to
recycle the ships in a standard manner:
Ship recycling activities are normally done on beaches. Yards are running
without having permanent structures and proper training for handling of
hazardous materials/toxic wastes. For green ship recycling, there is a
requirement for physical infra-structures, waste reception facilities, dry
docking facilities, appropriate training to workers for handling of hazardous
materials and proper equipment as per suitability of the work. All these
facilities need investment and after such investment the recycling cost will be
higher.
55
(iv) The cost involved in making the yards able to deal with the on-board
generated wastes:
Ship recycling yards are normally not serious about disposal of the hazardous
wastes received from recycling of ships but the same are handed over to any
one ready to pay or are disposed of in the sea/on the land. There is no facility
in the vicinity of the ship recycling yards to deal with these hazardous
materials and toxic wastes. For such facility, the yards have to take initiatives
with the support of the states concerned to invite companies and co-operate
with them in disposal of such wastes in a proper manner.
In this way, one can say that the costs for standard method of ship recycling is
higher due to additional facilities required for disposal of wastes in a proper manner and
safety norms to be followed by workers. It has been calculated to US$ 10-40/LDT, as per
the estimation for scrapping a container ship in a Chinese yard. The cost for some types
of ships, like tanker and reefer ships may be higher. To cover certain investment items for
yards not considered, the overall cost for estimation of the Ship Recycling Fund has been
taken up at US$ 25-50/LDT (“The Ship Recycling Fund”, 2005, pp. 19-23).
For estimation of the total requirement for the Ship Recycling Fund, the second
factor required to be known, is the supply of ships for recycling in the world market. The
global ship recycling volume and recycling projected by the World Bank for 2010-2030
is given in Figure-6.
56
Figure 6- Global recycling volumes 2000-2009 and projected recycling 2010-2030 in
million GT (2010 marked)
Source: World Bank Report (Unpublished) on ship breaking in South Asia, November 17, 2010. p. 34
As per the World Bank Report, 2010 (unpublished), the maritime sector enjoyed
high freight rate during 2005-2008 and the scrapping market slashed down during the
period due to operation of even older ships. However, operation of the older ships to
cover the high demand during the period increased the ship recycling volume in the years
2009-2011 after the recession in the world trade. Further, the phasing out of single hull
2000
2001
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2004
2005
2006
2007
2008
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2010
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57
tankers also, made an addition to the volume for the years 2009-2012. The balance of
backlog and single hull phase out has been divided among the main ship recycling states
(see Table 7) as per their share and the scrap tonnage distribution based on 2008 data
(World Bank Report, 2010, Unpublished, p. 34) among Bangladesh, India and Pakistan
for the period 2010-2030.
Table 7- Tonnage scrapped globally and in Bangladesh, India and Pakistan, 2010-2030
Accumulated tonnage scrapped 2010-2030 (million GT)
Location Distribution based on 2008 data Distribution based on 2000-2008 data
Global
Bangladesh
India
Pakistan
320.0
162.0
95.2
10.2
388.0
130.0
132.0
22.9
Source: World Bank Report (Unpublished) on ship breaking in South Asia, November 17, 2010. p. 34
5.3 Estimation of Ship Recycling Fund
Before taking any step to constitute the Ship Recycling Fund, one has to first
calculate the annual demand for such fund. The average annual fund requirement for ship
recycling can be calculated on the basis of the ship supply forecasted for the coming
years (shown in Figure 6). As mentioned above, the additional cost due to the green ship
recycling method has been taken at US$ 25-50/LDT. As the forecasted figure of ship
supply for recycling is in Gross Ton, it is to be converted into LDT for calculation of
fund requirements. First, Gross Ton is to be converted into Dead Weight Ton (DWT) and
then DWT into LDT as per conversion Table 8, as follows:
Table 8- Conversion factors
Tonnage Factor Tanker Bulk Career General Cargo,
Ro-Ro, Reefer
Container,
Others
*DWT (per GT) 1.75 1.70 1.44 1.00
**LDT/DWT factor 0.30 0.33 0.44 0.34
*Source: Stopford, 1982
** Source: The Ship Recycling Fund, 2005, p. 26
58
As LDT/DWT depends on the type of the ship and its size, its factors should also
be considered (factors shown in Table 8). In the next 3-4 years, the share of tankers/
liquid bulk carriers will be bigger in the total supply for recycling due to the phasing out
drive of single hull liquid bulk carriers. As per the forecasting made above, the
requirements of additional funds for green ship recycling will be as shown in Table 9.
Table 9- Requirement of additional fund for green ship recycling
Year Million GT/year Funding requirement in million US$
Low(US$25/LDT) High(US$50/LDT)
2011 23.0 297.850 595.700
2012 11.5 148.925 297.850
2013 9.5 123.025 246.050
2014 10.0 129.500 259.000
2015 10.5 135.975 271.950
2016 11.0 142.450 284.900
2017 11.5 148.925 297.850
2018 12.0 155.400 310.800
2019 12.5 161.875 323.750
2020 13.0 168.350 336.700
2021 13.5 174.825 349.650
2022 14.0 181.300 362.600
2023 14.5 187.775 375.550
2024 15.0 194.250 388.500
2025 15.5 200.725 401.450
2026 16.5 213.675 427.350
2027 17.5 226.625 453.250
2028 18.0 233.100 466.200
2029 18.5 239.575 479.150
2030 19.0 246.050 492.100
Annual
Average
14.3 185.509 371.018
Source: Author
59
The requirements of funds shown in Table 9 have been calculated for the
investment required for green ship recycling in the ship recycling facilities. There will
also be expenditure on arrangement and monitoring of funds, which needs to be
considered for calculation of the total requirement figure. On the basis of the above
assumptions, the average annual additional requirement has been calculated at US$200-
400 million to meet the gap between the conventional and standard practices of ship
recycling.
After arrangement and monitoring of the fund, the next important task is to ensure
its utilisation in a proper manner, otherwise the whole exercise would be infructuous. A
mechanism is required to be developed for its proper utilisation and accordingly, the
amount released to the stakeholder concerned (ship owner, shipyard or the state) is
required to be monitored to ensure its bona fide use.
5.4 Financial structure of the Fund
The fund structure for arrangement of „Ship Recycling Fund‟ can have any of the
following three options:
(i) Endowments: Capital investment can be done by the members of the
Association made for the Ship Recycling Fund and the income from the
investment is to be utilised to cover the gap between conventional and
standard practices of ship recycling.
(ii) Sinking funds: Under this system, the entire principal and the income from
investments can be accumulated regularly in a separate account and disbursed
over a fixed period.
(iii) Revolving funds: Under this system, resources are received on regular basis,
such as proceeds of special taxes, levies and charges augmenting the original
capital of the fund, providing a continuous source of funds for the purpose.
Among these three options, the first two types of funding require a big capital
investment; on the other hand, sources for revolving funds do not require big investments
but are managed from the current charges. The „polluter pays principle‟ suits this system
60
of funding managed from taxes and charges to be levied (“Study in relation”, 2009, p. 9).
Initial investment in ship recycling yards will be needed to facilitate them in initial
preparedness for green recycling. This support funding can be managed through donor
Helpance bilaterally or multilaterally or pre-financing by states in the form of loans.
5.5 Financial mechanism of the Fund
Funds can be raised in the form of contribution from the stakeholders either at the
construction stage or during the operational life of ships.
(i) Contribution at the construction stage of ships
The proposed „Ship Recycling Fund‟ can be raised by making contribution at the
construction stage of the vessel. For contribution at the construction stage, the system
adopted in the Netherlands can be followed. In the Netherlands, on the occasion of the
purchase of a car the owner has to pay a fee (i.e. 0.5% of the cost of the car) as disposal
contribution to be utilised by the foundation established to ensure standard dismantling of
the car at the end of its economic life. The foundation has been entrusted to manage the
fund, monitor the car recycling industry and subsidise the car recycling industry for
removal of non-recyclable materials along with the research and development work on
recycling methods. The car recycling industry is taking the cars without making any
payment to the car owners which has been accepted by the consumers. Further, for
disposal of batteries and electrical appliances, a similar system has been introduced there.
The European Union had also introduced a special scrapping fund to control the inland
navigation sector facing overcapacity. For raising this fund, pre-financing was done by
the member states through advance payment in the form of loans (“The Ship Recycling
Fund”, 2005, pp. 26-28). Such system of contribution at the construction stage can be
adopted for ships also and a fee structure can be made as per the type and size of the ship.
The ship owners can establish an association or club, which will be assigned the task of
collection and disbursement of the fund for green ship recycling along with the research
and development work on the subject.
However, there are certain demerits in this method: (i) The owners of the new
ships will have a competitive disadvantage in comparison to owners of existing ships
61
exempted from the contribution as the former only has to contribute for the Fund; (ii) As
the contribution is to be made by the new ships only, it will be too high due to the number
of new ships being much lower than the total number of ships in operation (details of the
present world merchant fleet and ship acquisition forecasted can be seen in Tables 10 &
11). Further, this system will be against the „polluter pays‟ principle as the owners of the
existing ships are creating more pollution than the new ships. Furthermore, the
accumulation of the requisite amount under the proposed fund may take a long time due
to lower number of contributing ships i.e. only new ships having a long economic life.
Table 10- World merchant fleet by country of domicile as of January 1st, 2006-2010
(Ships of 1,000 GT and above; in million DWT)
Country Type 2006 2007 2008 2009 2010
Country unknown 50.6 45.7 59.3 67.3 86.6
Country of domicile 885.8 955.4 1011.8 1077.1 1139.1
World total 936.4 1001.1 1071.1 1144.4 1225.7
Source: Shipping Statistics and Market Review, Volume 54 No. 7, 2010, p. 5
Table 11- Addition to the world merchant fleet by nation and foreign flag
distribution during 2005 and 2009 (in million DWT)
Ship type New Building addition to
National flag Foreign flag Total controlled
2005 2009 2005 2009 2005 2009
Tanker 9.7 15.4 22.4 34.7 32.0 50.1
Bulk Carrier 4.6 7.6 17.8 31.7 22.3 39.3
Container 1.5 1.2 9.5 10.0 11.0 11.2
General Cargo 0.7 1.1 1.6 3.3 2.3 4.4
Passenger 0.1 0.0 0.1 0.1 0.1 0.1
Source: Shipping Statistics and Market Review, Volume 54 No. 7, 2010, p. 6
62
(ii) Contribution in the form of fee levied during operational life of ships
The second option for financing can be in the form of fee levied during the
operational life of the ships. Earning of funds will be made from both the new and old
ships, which will be an impartial treatment to both age groups of ships. Collection of
funds under this system will definitely be bigger as the number of ships will be greater.
Under this mechanism, collection of fund has been proposed by one of the following
methods:
(a) Collection of fee along with P &I insurance premium of the ship: The
contribution for „Ship Recycling Fund‟ can be collected by the insurance
companies along with the insurance premium. As Protection and Indemnity (P
& I) insurance is highly international and obligatory, the contribution attached
with it will have favourable results. There will not be the requirement for a
new set up which will save the administrative expenditure.
(b) Levying through the flag states: The flag state providing the authority to fly
its flag can ask its ships to deposit the contribution for the fund. After
collecting the contribution, the flag state can transfer it to the fund organisers.
IMO can play a great role as a co-ordinator in such arrangement.
(c) Introduction of a recycling life insurance: After estimating the recycling
cost of a ship, the same can be collected within its operational life in the form
of annual life insurance premium. For collection of the recycling premium, the
services of insurance companies can be taken. The pre-cleaning and ship
recycling expenses are to be paid initially by the ship owners. The fund
accumulated is to be kept reserved and after submission of the
proof/certificate about green recycling of the ship, expenses on pre-cleaning
and recycling of the ship are to be reimbursed to the ship owner. In case of the
amount collected for scrapping of a ship found higher than the amount
claimed for reimbursement, the balance is to be refunded to the owner.
Similarly, in case of shortage, the limit of reimbursement would be up to the
fund accumulated in the form of recycling life insurance premium during the
operational life of the ship.
63
There are two demerits in the system- (a) there is a possibility of false certificate
to be submitted by the ship owners claiming green ship recycling. But it can be controlled
by making the condition to have recycling only from the ship recycling facilities certified
by the management of the Fund; (b) there is a possibility of different treatment by the
insurance companies with the old and new ships; insurance companies may deny
sometimes to insure old ships or if accepted, at very high premium (“The Ship Recycling
Fund”, 2005, pp. 30-33).
5.6 Disbursement mechanism of Ship Recycling Fund
Before selection of the most feasible option from the systems suggested above for
creation and operation of the „Ship Recycling Fund‟, the strategy proposed is discussed
below:
(i) Collection of fees: There are three options suggested above for collection of
fees- (a) by the insurance companies as fees along with the instalment of Hull
and Machinery; (b) the contribution to be collected by the flag states as levy;
(c) collection by the insurance companies in the form of premium for
recycling insurance.
As discussed earlier, collection of fees, its monitoring and certification of
ship recycling facilities, handing over all these responsibilities to the ship
owners either by making an association or club like P & I Club, appears to be
the best option under which the fees will be collected either through existing P
& I Clubs or a new set up as per their suitability.
The fees to be collected from ships can be decided on the basis of an
economic instrument as per the quantity of hazardous materials recorded in
the „Inventory of Hazardous Materials‟. The difference in the fee (the higher
the quantity of hazardous materials, the higher the fee) will give the message
„pollution not free‟ and will support the individual pollution control principle
also (Ma, 2010, pp. 487-497).
(ii) Certification and control: Ship recycling facilities claiming green recycling
practices will have to be certified by the management maintaining the Ship
Recycling Fund. The ships recycled by any of these certified recycling
64
facilities only, will be entertained by the management of the Fund for
reimbursement of the expenditure claimed by the ship owner on pre-cleaning
and recycling of the ships. These ship recycling facilities should be able to
recycle the ships as per the procedure prescribed under the Hong Kong
Convention and the guidelines issued from time to time by other international
organizations. There should also be a system for audit of these certified ship
recycling facilities at regular intervals by the independent audit parties
selected from the member states of the IMO. For co-operation from the states
concerned, IMO may provide necessary Helpance to the management of the
Fund.
(iii) Disbursement of fund: It would be ideal to give the liberty to the ship
owners to choose any of the certified ship recycling facilities. Ship owners
will choose one of the certified ship recycling facilities. After completion of
the pre-cleaning and recycling work in standard manner by making payment
on their own, the ship owners will submit the green ship recycling certificate
to the management for reimbursement of the expenditure done by them. After
scrutiny of the claim, the amount can be released from the Fund to the ship
owner. The amount reimbursed to the ship owner should be sufficient to meet
the additional fund spent for green recycling of the ship. In case of an amount
being lower than the requirement, there is possibility of continuation of the
parallel recycling market running in the states, not ratifying the Hong Kong
Convention. Therefore, the disbursement mechanism is to be finalised taking
into consideration all the aspects so that there is no risk of any parallel
recycling market providing sub-standard facilities.
(iv) Research & Development (R & D) on green ship recycling practices: For
improvement in the green ship recycling, research needs to be done
continuously. The management should arrange the fund for such research
work and monitor its progress along with implementation of the
recommendations made by the research team after examining their feasibility
and other practical aspects. Continuous research to sort out the problem in
65
existing procedure of ship recycling and further improvement in the existing
system will be helpful in achieving the goal of safe and environment-friendly
recycling of ships. The management of the „Ship Recycling Fund‟ should
make efforts to have research uninterrupted for efficient and effective ship
recycling facilities to achieve the goal of safe and environment-friendly
practices.
5.7 Similar system existing for waste management
To have an idea about the feasibility of the system proposed above, an analysis of
similar systems existing in many countries for green recycling of cars and other wastes
has been done below:
Sweden: In Sweden the overall responsibility for waste management rests with the
Ministry of Environment. In 1967, the Ministry established the Swedish Environment
Agency to function as the central enforcement and supervisory agency. The „deposit
refund‟ system was introduced by the agency in the 1970s under which the producer or
importer of a car pays a „recycling fee‟ decided by the Government. This fee is deposited
in the „Vehicle Disposal Fund‟ which is utilised as an incentive in the form of scrapping
premium. This scrapping premium is released to the final car owner after deregistration
of the car for green recycling. The final car owner also gets the chance to negotiate with
the dismantler about the negative or positive value of the car in addition to receipt of the
scrapping premium. In case of purchase of the car by the dismantler before its
deregistration, the scrapping premium is paid to him (“End-of-life Vehicles”, 2005;
“National Waste Management”, 2005).
The Netherlands: As already explained in para 5.5 (i) above, a „waste disposal fee‟ is
collected from the customer on the occasion of the registration of the car. The financing
for collection of the scrap cars and recycling activities, is done from this fund
accumulated as „waste disposal fee‟. Auto Recycling Netherland (ARN), established by
the Dutch Automobile industry, is responsible for collection of the scrap cars from the
66
last owner. The scrap car is taken from the owner without making any payment and its
green recycling/dismantling is done by the ARN under the contract signed with car
dismantling companies (“Recycling and Reuse”, 2008; “End-of-life Vehicles”, 2005).
Japan: In Japan the consumers pay a fee for dismantling on the occasion of purchase of a
new car. The fee collected is managed by a third party, the „Japan Automobile Recycling
Promotion Centre (JARC). To properly ensure the recycling of end-of-life vehicles
(ELVs), an electronic manifest system is used (Recycling and Reuse, 2008).
Similarly, the customers have to pay an extra charge for green dismantling of
other household items e.g. US$35 for a washing machine, US$40 for a television, US$50
for an air conditioner and US$60 for a refrigerator as recycling fee including the
transportation cost to the site of recycling (“Recycling and Environmental”, 2011).
Switzerland: Switzerland ranking among the top countries in the world regarding
environmental protection, stresses on the „polluter pays principle‟ about waste
management. It is the first country in the world establishing a formal system to manage ewaste. Electronic goods have been divided into two groups, namely brown goods and
white goods allocating the task of collection and recycling to the two organisationsSWICO and SENS. The financing for these activities has been arranged through the
Advance Recycling Fee (ARF) charged on all new appliances. This fund is utilised for
the expenditure on collection, transportation and recycling of the disposed appliances
collected free of cost from the owners through the collection centres of SWICO and
SENS around the country. To ensure quality maintenance and environmental standards,
there are multiple levels of independent controls supported by the national laws
(Khetriwal, Kraeuchi & Schwaninger, 2005).
The USA: In the USA a coalition of federal, State, industry and environmental non-profit
partners, created in 2006 a „National Vehicle Mercury Switch Recovery Program
(NVMSRP)‟ as a voluntary effort to promote safe removal of mercury switches from endof-life vehicles before their recycling. A voluntary US$4 million fund has been
67
established by the steel and auto manufacturers to provide incentives for switches
returned through the NVMSRP (“Recycling and Reuse”, 2008).
5.8 Summary
As appears from the above examples of waste management systems adopted by
many countries, the market-based incentive scheme is functioning as a motivation factor
for its success. The “Seven R‟s principle15” of Wal-Mart also supports the market-based
strategy. As per this principle, “When Wal-Mart tells a supplier that it wants a change in
packaging, that supplier changes all its packaging”. The principle demonstrates vividly
that a customer can exert considerable pressure on its supplier to accept the demand
placed by the customer (Lai, Lun, Wong & Cheng, 2010). In the ship recycling market,
the customer is the ship owner; if the ship owners will demand green ship recycling, the
yards will have no option but to opt for the same.
Establishing a Ship Recycling Fund to be utilised as an incentive scheme, can
function as a market oriented mechanism, motivating the ship owners to demand green
method for recycling of their ships which can not be denied by the yards to get the
business. To have such arrangement for green ship recycling, a proper mechanism needs
to be developed under which all the provisions for management of the „Ship Recycling
Fund‟ are to be finalised. But all these developments need support of the
Regulations/Convention in this regard. IMO being the nodal agency, should take
initiatives in this regard as it will Help in achieving the target fixed under the Hong Kong
Convention, 2009. Through the tacit acceptance procedure16, IMO can make such
provisions in the Hong Kong Convention.

15 The “Seven R‟s principle” of Wal-Mart refers to remove, reduce, reuse, renew, recycle, revenue and
read.
16 The ‘tacit’ or ‘passive’ acceptance procedure means that the body which adopts the amendment at the
same time fixes a time period within which contracting parties will have the opportunity to notify either
their acceptance or their rejection of the amendment, or to remain silent on the subject. In case of silence,
the amendment is considered to have been accepted by the party…”.
68
CHAPTER- 6
Discussion and Conclusions
6.1 Maritime industry and ship recycling
After globalisation of the world trade, the shipping sector played the key role in
transportation of goods from one corner of the world to another. The increase in the
world tonnage offered ship owners a chance to increase their fleets. As the demand in the
world trade is not always increasing but constantly fluctuating, it affects the world
merchant fleet. In case of increase in the demand, the fleet size increases; similarly, in
case of decline in the demand, the fleet size has to decrease accordingly. Apart from
cancellation of the ship acquisition orders, ship owners have two immediate options
available to downsize their fleets: either lay up their old ships or sell them for recycling.
As laying-up of ships is a temporary and expensive arrangement preferable for a shorter
period, ship owners opt to sell their old ships for recycling. Otherwise also, after
technological changes or on completion of the economic life, the ships are required to go
for recycling. As ship recycling is the most sustainable and eco-friendly way of disposing
of old vessels, it is beneficial to all offering the use or recycling of every part of a ship‟s
hull and machinery.
In the first decade of the 21st century, the shipping industry enjoyed the boom for
4-5 years, but in the second-half of 2008 it felt a drastic decline in demand compelling
ship owners to downsize their fleets. This decline in the world trade offered the ship
recycling industry a good number of vessels for scrapping. Simultaneously, the
amendments in IMO‟s Convention, MARPOL 73/78 also enriched the ship recycling
industry, especially by single hull tankers. The period of 2009-2011 came as the golden
period for this industry after sufferings during the period of 2004-2008, considered as the
golden period for the freight market. In the years 2012 and 2013, the supply of ships for
recycling is expected to decline but it will grow steadily thereafter, as per the forecasting
of the World Bank (World Bank Report, 2010, p. 34).
69
The ship recycling industry which has a tendency to shift from one place to
another, is presently running in South Asian countries (Bangladesh, India and Pakistan),
China and Turkey. Due to cheaper manpower and liberal regulations on safety, health and
the environment, ship recycling is cheaper in these states. The principle of ship recycling
being a sound one, the method adopted by these states provides no room for safety of
human-life and the environment. Ship recycling yards are lacking the infrastructural
facilities and knowhow about handling and disposal of hazardous materials/toxic wastes.
But they are not ready to invest in the business which is volatile in nature having a
tendency to shift due to any of the reasons like strict compliance of the regulations,
cheaper manpower, scrap steel demand or any other political reasons. If ship recycling is
done by the standard procedures, it becomes expensive and the ship recycling yards
facing tough competition in the market, have the risk of losing the business in case of
following the standard procedures of recycling.
6.2 Ship recycling: a commercial activity
Ship recycling is a commercial activity; therefore, any solution to the problem
faced by the industry is required to suit the market. If the market demands investment in
infrastructure and training facilities for the workers, the industry will take the necessary
steps automatically for such facilities just to avoid the risk of losing customers. For
survival in the market, ship recycling yards will have to develop the facilities demanded
by the market otherwise they will lose the customer. It can therefore, be said that the
solution to the problem of substandard practices in the ship recycling industry demands a
commercially viable mechanism, able to compel the stakeholders to opt for the standard
practices for recycling of ships.
To achieve the goal of safe, sound and environment friendly recycling of ships,
the Hong Kong Convention was adopted by the IMO on 11th May, 2009. The Convention
reflecting the responsibility of the ship owners just from the construction stage of ships to
its demolition, has been appreciated by the world. However, enforcement of the
Convention may take some time as one of its three conditions (Article-17) is related to its
ratification by main ship recycling states. Pattaya Workshop organised by the IMO in
70
May, 2010 is an effort towards early ratification of the Convention by these ship
recycling states. However, critics have raised doubt about the success of the Convention.
As per critics, even after the entry into force of the Convention, there is a
possibility of two distinct ship recycling markets running parallel. Presently there is no
incentive for green ship recycling. Ship owners are selling their ships to the yards
offering the best price. As explained in Chapter 5, cost is the main barrier in green ship
recycling and to achieve the goal of green ship recycling, co-operation from ship owners
is the crucial factor so that the yards doing sub-standard practices can be discouraged. In
such a situation, the market will compel those yards to develop the facilities demanded;
otherwise the yards will have no option but to close down. The arrangement of a Ship
Recycling Fund proposed by the author to meet the additional expenditure for green
recycling, is expected to function as a commercially viable solution motivating ship
owners to opt for green recycling of their ships. Consequently, the ship recycling
facilities will get motivation from the demand of the market (demand-supply principle of
economics) for green ship recycling. All these market-based consequences will lead to
the ultimate goal of green ship recycling targeted under the Hong Kong Convention,
2009. The only thing that is to be taken care of, is the arrangement of the „Ship Recycling
Fund‟, its monitoring and disbursement mechanism, which should be transparent and
acceptable to all the stakeholders.
As discussed in Chapter 5, assigning the responsibility to the ship owners for
arrangement and control of the „Ship Recycling Fund‟ along with its disbursement
mechanism appears to be the best feasible mechanism to achieve the goal of green ship
recycling. Ship owners can make an association like P & I Club or assign the
responsibility to the existing P & I Clubs. According to the author, for a permanent
solution to the ship recycling industry shifting from one place to another, the IMO can
take initiatives to have a market based solution to the problem and if required, necessary
provision(s) in the Hong Kong Convention, 2009 may be made in line with the system
proposed above.
71
6.3 Conclusions
The findings of the research derived from the discussion made in the chapters of the
dissertation on the issues involved in ship recycling are as follows:
 The ship recycling industry has the tendency to shift to the place having cheaper
man-power, liberal regulations on safety of human-life and the environment along
with a good market for scrap steel/reusable items received from ships.
 As the standard procedures of recycling are expensive, existing ship recycling
yards facing tough competition, are following sub-standard procedures i.e.
insufficient infrastructural and improper waste disposal facilities, workers without
proper training and lacking knowledge about handling of hazardous materials.
Under the standard procedures, ship recycling is done with adequate
infrastructural facilities, by the trained workers with appropriate equipment along
with the proper waste management facilities.
 Cost is the main barrier in achieving the goal of green ship recycling. With the
intention to get the best price, ship owners sell their ships without any
consideration about the recycling method to be adopted by the ship recycling
yards. The yards running the business with small margin and without any long
term strategy, opt for the sub-standard practices of recycling to maximise their
earnings from the business.
 The Hong Kong Convention, 2009 explains the responsibility of the ship owners
from the construction stage of ships to its demolition. Handling of hazardous
materials from construction to the demolition stage of ships along with the
condition to carry the inventory, has also been explained in detail. The
responsibilities of all the stakeholders have been mentioned as well as the
procedure to be followed by them for safe and green ship recycling. However, not
only the support of the regulations but also a market oriented strategy needs to be
developed to motivate the stakeholders for green ship recycling.
 As cost difference in the conventional and standard procedures of ship recycling
is the main barrier, a market-based incentive scheme acceptable to all the
72
stakeholders, is required to be introduced together with the supporting
Convention/regulations.
 The Ship Recycling Fund proposed to be arranged to meet the additional cost for
green ship recycling, is expected to function as a commercially viable solution
motivating the ship owners and recycling facilities to go for green recycling.
 All the states having maritime activities should come forward and co-operate with
the IMO in achieving the safe and environment friendly sound recycling of ships
targeted under the Hong Kong Convention, 2009.
*********
73
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APPENDICES
Appendix A
Resolution 5 on the Early Implementation of the Technical Standards of the Hong
Kong Convention, 2009
….
RECOGNIZING the benefits to be derived from the early application of the technical
standards contained in the Annex to the Convention and in the associated guidelines in
respect of the environment and the occupational health and safety aspects associated with
ship recycling,
1.INVITES Member States of the Organization to consider applying the technical
standards contained in the Annex to the Convention on a voluntary basis to ships entitled
to fly their flag, as soon as operationally feasible;
2.INVITES ALSO Member States of the Organization to consider applying the technical
standards contained in the Annex to the Convention on a voluntary basis to ship recycling
facilities under their jurisdiction, as soon as operationally feasible;
4. INVITES the industry to co-operate with Member States of the Organization in
applying the technical standards contained in the Annex to the Convention to ships and
ship recycling facilities, as appropriate.
79
Appendix B
80
Appendix C
81
Appendix D
82
Appendix E
83
Appendix F
Year-wise Number of Fatal Accidents in Alang, Gujarat (India)
84
Appendix G
Ship Recycling Site, Alang Visit Report
The author is a student of World Maritime University (WMU) doing the postgraduation course in Maritime Affairs (specialisation in Port Management). World
Maritime University is an organisation running by and for the international maritime
community, operating under the auspices of the International Maritime Organisation, a
specialised agency of the United Nations. Being a part of WMU family, to Help the
maritime sector in achieving the goal of green ship recycling, the author chose to write a
dissertation, analysing the creation of a global ship recycling fund in the frame-work of
the Hong Kong International Convention for safe and environmentally sound recycling of
ships, 2009.
The author visited Alang, India (19-21 September, 2011) to have first-hand
knowledge of the ship recycling activities running there. Alang is a coastal town of
Gujarat state located in the Gulf of Khambat, 50 kilometres southeast of Bhavnagar. Ship
recycling yards in Alang-Sosiya have the advantage of the location with the highest tidal
level (10 meters) in the country and the best continental self available for ship breaking in
Asia. The high tide facility makes it possible to accommodate VLCC, bigger Ro-Ros and
container ships to be beached during the high tide and scrapped as the tide recedes.
Visit of GMB office
The visit to Alang could be organised with the co-operation of Capt. S. C. Mathur,
Chief Nautical Officer, Gujarat Maritime Board (GMB), State Govt. of Gujarat on the
request of the Ministry of Shipping, Govt. of India. The visit started on 19th September,
2011 from the O/o the Gujarat Maritime Board, Alang with a small briefing by officials
of GMB about the ship recycling activities and the monitoring role of GMB. Capt. S.
Chadha, Port Officer, GMB who is in charge of the PMB office at Alang provided the
information about the number of ships (year-wise) recycled during the period 1982-83 to
2011-2012 (up to August, 2011) which may be seen in Appendix D.
85
Visit to ship recycling yards
After the visit to the GMB office, the author visited Plot No.-V-1, Priya Blue
Industries Pvt. Ltd. owned by the ship breaker, Mr. Sanjay Mehta. This yard has the
record of dismantling the largest super-tanker of the world, „Knock Nevis‟, owned by a
Norwegian Company, „Fred Olsen Production‟. In the yard the author saw the state of art
technique of removal of asbestos containing materials from ships and the removal of
bigger parts of the ships beached to the area of the yard having permanent shaded
dedicated platform for cutting them into smaller pieces. To cut the ship, the yards have a
ship cutting engineer (called „Mukdam‟ in local language) who decides the cutting plan
of the ship as per its structure, size and type. Here the workers were wearing long boots
and hand gloves but some were not wearing gloves all the time perhaps due to lack of
knowledge about its impact on their health and safety. The author suggested to the
manager of the yard that a small fine to the workers found working without gloves be
imposed so that it becomes their habit to always wear gloves.
The author visited Plot No.-2, Leela Ship Recycling Pvt. Ltd. also. This yard was
equipped properly having an asbestos handling unit, incinerator, medical and training
facilities for the workers inside. The yard was functioning with safe and environment
friendly facilities for green ship recycling.
Visit to the Safety Training Institute
Further, the author visited the training institute at Alang, which is responsible for
organising the training programme for workers on safety and waste management of ship
recycling. The training programmes are normally for 2-3 days duration covering different
aspects of ship recycling. Apart from the training programme, socio-economic activities
are also arranged by the institute involving the workers‟ families to make them able to
earn something from arts and craft. Therefore, the institute has the name, „Training and
Welfare Complex, Alang‟. The institute management discussed the problem in achieving
the goal of 100% workers trained due to migrated labour force. As per them, in ship
recycling activities the labour-force involved is the labour migrated from other parts of
86
the country and from time to time they escape to their native places. Discontinuation of
the labour in ship recycling work makes the training programme run by the government
infructuous. The author advised the management to arrange workshops sometimes for
yard owners and their management staff to have discussion towards exploring the
solution of such problems. The institute provided the details about the workers trained
since its inception i.e. 2003 to August, 2011, which can be seen in Appendix E.
Furthermore, the institute provided the information about year-wise numbers of fatal
accidents during the period 1996-97 to 2011-2012 (up to June, 2011), which can be seen
in Appendix F.
Visit to the Waste Management Site
Finally, the author visited the site of waste management where he saw the land fill
sites for disposal of asbestos and other hazardous materials. The dedicated land fill
facility for disposal of the wastes generated by ship recycling can be called a good
initiative of GMB.
The next day i.e. 20th September, 2011 the author visited the Ship Recycling
Industries Association (India), Bhavnagar and met with the President of the Association
(Mr. Vishnu Kumar Gupta) and Mr. Nitin Kanakya, having a long discussion on different
issues of ship recycling. After that the author visited the O/o the Regional Officer,
Gujarat Pollution Control Board, Bhavnagar, Mr. Shah and discussed with him about the
waste management of ship recycling done by GMB. He explained about the arrangements
already made by GMB and its future plan to make Alang ship recycling area like Bharuch
(Gujarat), where the green belt has been developed by the State Govt. on the waste
disposal site.
On the last day of the tour the author visited the Head Quarters of GMB at Gandhi
Nagar (the capital of Gujarat state). There he met with the Senior Environmental
Engineer, GMB (Mr. Atul Sharma) and discussed about the waste management work
done by GMB for all types of industrial wastes including ship recycling. He explained the
changes that had happened after the Supreme Court of India order dt. 06/09/2007 in a
87
hazardous waste (Blue Lady Ship breaking) case, asking the government to do what was
needed to ensure safety and waste management.
Before the visit to Alang, the author visited the Ministry of Steel, Government of
India, Delhi on 16/09/2011. As ship recycling provides good enough scrap steel for
recycling, it is the subject matter coming under this Ministry; the author discussed ship
recycling with officer of the Ministry (Mr. C. A. Jhoseph, Under Secretary) concerned. A
copy of the unpublished report of World Bank on ship recycling in South Asia, submitted
to the Government of India for its consent before publishing, has also been provided by
the officer. This report contained quite useful and the latest information on ship recycling
in South Asia (Bangladesh, India and Pakistan). The author utilised the report in the
dissertation to show the ship recycling forecasted for the period 2010-2030.
The present visit to Alang, India for first hand information on ship recycling was
very useful and valuable especially for the research work on the subject.
Gopal Krishna Choudhary
Port Management (s 11009)
World Maritime University
Malmo, Sweden

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