Facing headwinds

On July 21, 2019, cargo ship Eda left port for the last time, from Montreal to an eco-friendly recycling facility in Turkey. Canada Steamship Lines (CSL) owned the Eda for the last 17 years of its 60-year life, and it’s the 15th vessel the firm has recycled since launching its ship-recycling policy in 2009. CSL only selects yards that are Hong Kong Convention-certified, ISO 14001, OHSAS 18001, ISO 30001, and that are vetted by the company’s independent third-party ship recycling partners.

But most vessels do not receive such careful stewardship. Globally in 2018, 744 large marine ships were scrapped, and 518 of those by the hazardous beaching method in Bangladesh, India and Pakistan. In terms of gross tonnage, this amount – 90.4 percent of the gross ship tonnage dismantled globally – breaks a record, says Nicola Mulinaris, communications and policy
officer at non-governmental organization Ship Breaking Platform (SBP).

“In Turkey, India and Bangladesh, where the great majority of the world’s obsolete ships are recycled, ships are beached bow first, with the stern of the ship unsecured and still containing liquid wastes, oils and various chemicals,” says Marine Recycling Corporation (MRC) director of administration and HR Jim Morgan. MRC recycles Great Lakes vessels in Port Colborne, Ontario and mostly warships in Sydney, Nova Scotia.

“The stern contains most of the environmental and worker safety hazards and is left until the end of the process in these yards.”

Further, Morgan notes, very few of the world’s active ship recycling yards, including Turkey, are set up for proper decontamination because they have no ‘alongside docks’, which enable removal of toxic substances before any dismantling starts, eliminating the risk of spills and greatly reducing safety issues.

Dirty weather

It’s a dirty side of the ocean shipping business. And there is little to stop it from happening. The 2009 Hong Kong Convention, an international responsible ship-breaking agreement, has not yet been fully ratified although this year it’s been ratified by seven nations, including Turkey, the Netherlands, Germany and Japan. Canada has yet to ratify. Its aim is to ensure that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risk to human health and safety or to the environment.

In early 2019 Canada enacted new legislation, the Wrecked, Abandoned or Hazardous Vessels Act. It increases owner responsibility and liability for vessels and addresses irresponsible vessel management, including enabling the Cost Guard to address all vessels and wrecks, including those that pose, or may pose, a hazard in all Canadian waters and in the exclusive economic zone of Canada. It also makes vessel owners strictly liable for the costs of removing wrecks, if it’s determined that they pose a hazard to the environment, local economy, safety of navigation or Canada’s coastlines.

It does so by requiring owners of vessels 300 gross tonnes and above to maintain and carry proof of insurance capable of covering the potential costs related to wreck removal, as well as any losses that might be claimed as a result of the wreck. Not complying with the Act now can result in penalties of up to $50,000 for individuals and $250,000 for companies or corporations, while regulatory offence prosecution could result in a maximum fine of $1 million for individuals and $6 million for corporations.

Final voyage

In the meantime towing old Canadian ships overseas continues. “The potentially riskiest part of ship recycling is towing dead ships to recycling yards,” Morgan explains. “Ironically, this is the part of the process least considered for the most part…Some vessels such as Great Lakes freighters are not built to cross oceans and are certainly less sound to do so after decades of use and various levels of steel corrosion.”

Not only are ships often towed uninsured with seaworthiness unconfirmed, says Morgan, the proper precautions and preparations are not undertaken, which need to account for the most extreme weather conditions that could occur during the time of year towing occurs.

“MRC would like to see our Canadian policies strictly enforced,” says Morgan. “That is, insurance coverage from insurers registered in Canada and verified from departure to arrival, with naval architect reports verifying a ship’s condition for the intended tow voyage, and so on.”

He points to a ship called the MV Miner that ran aground near Cape Breton in 2011 while being towed from Montreal to Turkey for scrapping. In that case, the towline snapped, and Morgan figures dealing with the situation cost Canadian taxpayers $20 million dollars.

MRC has a stake in keeping ships in Canada, of course. Costs are “100 percent” why North American companies also tow old vessels overseas for scrapping, Morgan says. “Canadian ship owners have exported more than one million man-hours of work to Turkey in the past four years alone.”

The cost of towing European ships to Canada for scrapping is prohibitive and so are Canadian wages in comparison to those offered in Turkey, so the traffic is not flowing west from Europe.

Mulinaris agrees that profit is at the heart of where companies choose to recycle ships. SBP reports that over the last decade, an average of 65 percent of ships and 85 percent of gross total global tonnage have been beached and scrapped in a dangerous way. “The numbers clearly do not show any positive change,” Mulinaris says. “If [shipping companies] were to sell ships to a clean and safe yard, they would still make a profit, but they would earn a couple of million dollars less per ship.”


The stacks from a ship awaiting recycling.

About 90 percent of a ship is steel, with some iron and nonferrous metals also usually present. Furniture, machinery parts and more can also be sold. “We make tables from portholes and keep other artefacts we think have value as well,” Morgan explains, “but truthfully, it is all about the metal content in a ship.” While the price of scrap steel can be good, since January in Ontario, Morgan says it’s decreased by over $150/ton. “For a 7,500-ton vessel, that’s over $1.1 million less revenue,” he says, explaining there’s “a market risk for every vessel given the fact that it’s months after a vessel is acquired before the steel scrap is sold and shipped.”

Disposal of dangerous materials like PCBs, oils, chemicals and paint, is heavily regulated. “MRC has a certified group of facilities it employs for waste and hazardous wastes,” Morgan notes, “including our sister company Raw Materials Company.”

MRC does a thorough round of sampling and testing before they take a ship, so all hazards are identified and quantified. However, asbestos abatement costs on one recent project to recycle the Princess of Acadia exceeded $1.75 million, costing seven times more than any asbestos abatement project in MRC’s 60 year history in the business. This Transport Canada owned Ro-Ro ferry contained 428 percent more asbestos insulation than was reported on the Hazardous Materials Inventory provided to bidders.

Smooth sailing ahead

Increasing numbers of ships will be dismantled at facilities that are best for workers and the planet, however. For example, SBP annually identifies who owns which ships destined for scrap and where they send them, and this is used by major banks and investors to decide which shipping firms warrant an investment.

Mulinaris notes that in 2018, two Scandinavian pension funds divested from four shipping firms due to their beaching practices. And last year, for the first time, a ship owner was held criminally liable for having sold ships for hazardous breaking.

The Ship Recycling Transparency Initiative (SRTI) is similar; it’s an online platform launched early last year for cargo owners such as BMW and other stakeholders to inform themselves about the approaches to ship recycling of various shipping companies.

The European Union has passed legislation that exceeds the Hong Kong Convention’s requirements, and has a list of compliant recycling facilities in Europe, the USA and Turkey. Bangladesh and India have legislation on ship recycling currently under consultation.

“We see the narrative on responsible and sustainable ship recycling slowly changing,” says SRTI head of communications and development Nicole Rencoret. “In addition to the increased number of states ratifying the Hong Kong Convention, we are seeing more shipowners becoming more transparent in disclosing their respective approaches to ship recycling, and welcoming initiatives such as the SRTI. We have also found an increasing movement to contextualizing the decommissioning of ships within the broader circular economy agenda, looking at the entire ship lifecycle, from ship design and building to operations and reselling, and finally, recycling.”

Reinforcing that opinion, MRC reports it has a backlog of work. The firm is planning to expand its Ontario facility and is considering building a new one on the West Coast.