Asian workers pay price for EU ship recycling

“Nearly 90 percent of the gross tonnage recycled is handled in sub-standard health, safety and environmental conditions,” A.P. Møller — Maersk, owner of the world’s second-largest container fleet, wrote in its Sustainability Report 2022 on the failure of protective regulations.

“This unfortunately has led to a situation where a theoretical capacity list [of shipyards accepted for dismantling] is updated every year without any concrete hold in reality on the ground,” Maersk told the European Commission in its filing.

One such reality can be found in Chattogram (formerly known as Chittagong) — a tidal beach in Bangladesh. Here, the cargo ship RACE landed on 2 April 2022 in the intertidal Sitakundu area, a 15km long coastline subject to tides. RACE carried a Liberian flag on the stern. It had previously carried a Maltese flag.

In Sitakundu a tide rises daily which covers hundreds of metres of beach, allowing ships to approach the shore at full speed. When the waters recede, the vessel lies on the shallow seabed, ready to be dismantled. Once the ship is beached, workers begin combing the decks, removing anything that can be resold, from furniture, to radios, life jackets, and asbestos. Then the process of physically demolishing the ship begins.

Asbestos and toxic fumes

Armed with blowtorches, sunglasses, and rags to cover their nose and mouth as their only protection, demolition workers begin torch-cutting the ship into large pieces, hauled ashore for secondary cutting.

NGO Human Rights Watch records workers describe how they use their socks as gloves to avoid burning their hands as they cut through molten steel, wrapping their shirts around their mouths to avoid inhaling toxic fumes and carrying chunks of steel barefoot.

The blocks fall onto the sand or into the water below using what in technical jargon, with a hint of irony, is called the “gravity method”.

The ship’s paint, containing heavy metals and other waste, settle at the bottom. It is impossible to clean them before the tide returns, taking the cut-out pieces away.

An international convention for the Safety of Life at Sea (SOLAS) banned the use of asbestos or asbestos-containing materials on merchant ships worldwide from January 2011. Although banned for use, the asbestos is still there being dismantled by hand on Southeast Asian shores, then often resold and reused.

In Bangladesh, dozens of laboratories transform sheets containing asbestos into ovens for cooking at home. Furniture shops along the coasts sell cheap “asbestos ovens” for as little as 250 Bangladeshi taka (€2), The Daily Star has reported.

“There is no asbestos victim in the industry, as ships built after 2000 do not carry any asbestos. It has been a conspiracy to shut down the prospective ship-breaking industry in Bangladesh by media and NGOs,” said the president of the Bangladesh Ship Breakers and Recyclers Association Abu Taher.

Navigate for the highest returns

To protect workers’ safety, health, and the environment, four regulations coexist besides the ban on asbestos — one European law and three international conventions.

In this regulatory forest, the industry has been able to navigate between do’s and don’ts to find a solution giving the highest returns. The price of re-cycled metals and ship inventories is decisive. The ships are worth their weights in dollars per tonne.

Prices depend on demand from steel companies, which buy scrap for the manufacture of new steel. The prices also reflect working conditions at the demolition sites.

To date, yards in Asia have offered the best prices: Yards in Turkey pay shipowners around $325 per tonne, while Pakistan and India pay around $525 per tonne of dissolved ships. Bangladesh is currently the cheapest last destination with ships being purchased by the yards at around $600 a tonne. Medium to large cargo ships can yield owners an income of $5-10m.

By foregoing precautions, equipment, and rights for workers, Asian dismantling companies guarantee more than competitive prices. In Europe, the prices vary from €50 to €150 per tonne, as the yards have much higher expenses.

“To remove materials such as asbestos a ship must be inserted inside a watertight structure similar to a cocoon, from which no substance can escape. This alone significantly increases disposal costs”, Peter Wyntin, responsible for safety, environmental, and health measures at one of the shipyards authorised by the EU, Van Heyghen Recycling in Ghent, Belgium, told IRPIMedia.

Convenience flag and cash buyers

Two factors explain the dismantling of ships on Southeast Asian beaches despite conventions and regulation.

The ships change flags and owners for their final journey. That’s why the cargo ship RACE arrived in Chattogram under a Liberian flag although it was formerly known by other names and flying other nations’ flags on its stern.

The so-called flag of convenience means that ships are registered in countries that guarantee fast procedure. Nations such as Liberia, St. Kitts and Nevis, Palau, and Tuvalu, offer what is known as “last voyage packages”, which allow ships to be disposed or recycled without the original owner being held responsible for how it is done.

And the ship owner often changes for the last journey when bought by an intermediary — companies known as ‘cash buyers’ — to be dismantled.

“It will be enough to change the flag of the vessel you want to demolish immediately before making the last voyage to avoid legal problems. They can declare that they have had nothing to do with the sale of waste onboard and with the ship itself to an Asian scrap yard,” Nicola Mulinaris of Shipbreaking Platform told IRPIMedia.

Those who rule the waves

“It is indisputable that the owners of the ships are able to legally circumvent the European laws by changing the flag or selling the ships,” said Nikos Mikelis, a former director for marine pollution and ship recycling at the IMO (International Maritime Organisation), an UN-body.

The European Commission is now evaluating the current EU Ship Recycling law. The regulation only accepts dismantling of ships at shipyards on a ‘European List’ which includes several shipyards in Turkey and one in the United States.

The Asian shipyards where the dismantling takes place are not on the list. But by shipowners changing flags, the European list becomes irrelevant. EU laws do not bind non-EU countries.

Panama, the Marshall Islands, and Liberia formally own 42 percent of the world’s fleets. This makes them able to set the rules once the international Hong Kong Conventions come into force in 2025.

This allows the West’s naval industry to maintain its capital and control by setting the demolition rules via the “tax havens of naval flags”.

“The [EU] Commission acknowledges that the existing loopholes must be addressed. The re-flagging before dismantling is one of the main issues considered in the context of the ongoing evaluation,” an EU Commission official said.

“After the evaluation, the Commission will swiftly assess the need to propose the modification to the EU SRR with a view to address this shortcoming,” the official added.

Licence to kill

At the same time, the commission is working on a study on a financial instrument. The potential new tool would help finance sound recycling conditions based on the idea that shipowners pay a recycling licence each time their ships enter a European port.

When the ships are taken out of traffic to be dismantled the shipowners get most of the licence fee back, provided that the ships have been dismantled under acceptable conditions. If not, the licence fees are forfeited and kept in a fund to be used for recycling.

But such a licence would be built on the assumption that Southeast Asian shipyards adopt the safety and environmental standards set by the EU regulation and are helped to do this by the licence fee.

And even so, it would still take 20 years before half of the world’s fleet would be “incentivised” to opt for sound recycling, an EU study has estimated.

Meanwhile, Maersk believes that interest in ship recycling is likely to grow with the market in “green steel”, lower CO2-emitting steel production than that traditionally produced by iron and coal. This is likely to fundamentally change the recycled steel market, and make recycling more competitive in Europe, Maersk told the EU Commission.

There is also an urgent need to take care of ageing ships in the “post-Panamax” category, ships too large to navigate the Panama Canal, and too large to be dismantled in existing dismantling yards.

“We strongly encourage the European Commission to start from scratch and rethink its approach,” recommended Maersk.

What this alternative vision might look like is less clear.

This story is part of a cross-border investigation on asbestos in ships with the support of Journalismfund Europe. Edited by Katharine Quarmby and EUobserver.