understanding environmental and regulatory aspects in … · 2019-11-21 · •eu ship recycling...

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Dr. Anil Sharma, Founder & CEO

Understanding Environmental and Regulatory aspects in determining Residual Values of Ships & Offshore Assets

Environment & Regulations 1

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✓ Established in U.S.A. in 1992, GMS is the world’s LARGEST Buyer of ships & Offshore Assets for recycling!

✓ We are traders (not brokers) who buy assets, generally on AS IS WHERE IS basis, and deliver them to the recycling yards.

✓ So far, we have negotiated in excess of 3,500 ships and offshore assets; averaging about 200 units per year for the past decade.

✓ We taken a proactive and leading role in the development of the Responsible Ship Recycling Program (RSRP) that is complaint with the IMO’s Hong Kong Convention (HKC) on Safe and Environmentally Sound Recycling of Ships.

✓ Our team of globally recognized experts regularly guide owners on environmental and regulatory aspects of ship recycling .

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61.50

49.83

34.76

39.67

45.65

36.70 33.99

12.30

12.18.0 4.3 6.3

9.7 7.5 6.4 2.3 -

10.00

20.00

30.00

40.00

50.00

60.00

70.00

2012 2013 2014 2015 2016 2017 2018 2019

Tons Scrapped (Dwt) Tons Scrapped (LDT)

Note: All numbers are approximatesNote: 2019 figures represent first half of the year


Perceptions of the Ship Recycling Industry


• Hong Kong Convention (HKC) for Safe & Environmentally Sound Recycling of Ships

• Ratified 10 years ago – May 15, 2009

• 77 yards in India, 10 yards in Turkey and 1 yard in Bangladesh are HKC (SOC) certified

(as of Sept 2019)

• 4 IACS Societies (NK, RINA, IRS, LR), issue Statement of Compliance (SOC) certificates

• While the convention has not entered in force, HKC has become the standard for

Safe and Environmentally Sound Recycling of Ships


Ship recycling volume of these 15 states should not be less than 3% of their combined tonnage (during the last decade)

Their combined tonnage represents not less than 40% of the gross tonnage of the world’s merchant shipping

At least 15 States have either signed / accepted / approved it Currently

• 13/15

Currently

• About 29% / 40%

Currently

• about 0.5%

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Source: Status of Conventions, IMO, September 2019

Contracting States of HKC

❑ Current Status: 13 contracting stateswhose combined fleet is 29.42% of the gross tonnage of the world fleet and whose combined annual ship recycling volume in the last 10 years is 1,729,478 GT or 0.44% of the merchant shipping tonnage of the same States.

❑ Requirements for HKC Entry into Force: 15 or more States, with no less than 40% of the world’s shipping gross tonnage and combined recycling volume that is at least 3%of the gross tonnage.

Contracting State

Belgium (accession)

Congo (accession)

Denmark (accession)

Estonia (accession)

France (ratification)

Germany (accession)

Japan (accession)

Malta (accession)

Netherlands (accession)

Norway (accession)

Panama (accession)

Serbia (accession)

Turkey (ratification)


• EU Ship Recycling Regulation (EUSRR): EU Flag Vessels• Came in to force January 1, 2019• EU flag ships to be recycled in EU approved facilities only.• Currently 34 yards approved by EU. Except for 3 yards in Turkey and 1 in USA, 30 are in

Europe. • The current capacity CANNOT meet global demand.

• EU Waste Shipment Regulation (EUWSR): Non-EU Flag Vessels• A non-EU flag ship departing from an EU port for recycling, is considered “WASTE” and in

accordance with Basel Convention/EUWSR must be recycled in an OECD country only. • Exporter (ship owner) has to apply to both exporting and importing countries PRIOR to the

departure of the vessel.• Processing time make take from 4-16 weeks • Exporter will be required to lodge a deposit (guarantee) until ship completes recycling .

Amount 500,000 to 2M Euros


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Common Questions:

➢ Hong Kong Convention (HKC): Has it entered in force? Is it green recycling?

➢ What’s the difference between Basel Convention, HKC, EU Waste Shipment Regulation and EU Ship Recycling Regulation?

➢ Should I follow HKC or EU?

➢ What is Environmentally Safe and Responsible Ship Recycling?

IMO’s Hong Kong International Convention for the Safe and

Environmentally Sound Recycling of Ships, 2009

EU Ship Recycling Regulation

The EU Waste Shipment Regulation and the Basel Convention

(Regulation 1013/2006 of the European Parliament and the

Council of 14/6/2006)


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Supply & Demand Steel Prices… Ore, Finished steel Currency exchange rates

✓ Regulations

✓ ESG criteria

Factors Affecting Residual Values of Ships


Currently Turkish yards pay about USD 200-250/t Indian Subcontinent USD 350-400. EU yards: negative to 150

EU Ship Recycling Regulation: Commercial Implications

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Residual Values FPSO 40k LDT Semi-Sub 20k LDT Jack Up 10k LDT

Indian Subcontinent $ 16,000,000 $ 7,600,000 $ 3,600,000

Turkey $ 9,200,000 (57.5% of the

Indian Subcon price)

$ 4,600,000 $ 2,100,000

EU approved Yard $ 4,000,000 (25% of the

Indian subcon Value)

$ 2,000,000 $ 1,000,000


❑ Recycling impacts ALL of us:✓ Capital Providers, ✓ Ship Owners, ✓ Charterers, ✓ Underwriters,✓ Ship managers, ✓ Class societies, ✓ Shipbuilding yards

❑ A ship for scrap is NOT WASTE!❑ Ignoring Regulatory and Environmental Factors raises: Financial risks, Headline risks,

Social risks, Political risks, Intellectual risks, Personal risks, etc

❑ GET INVOLVED. BE PROACTIVE. ASK QUESTIONS. UNDERSTAND TRUE FACTS.

Call to ACTION!


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250.00

300.00

350.00

400.00

450.00

500.00

Steel Prices India

62.0064.0066.0068.0070.0072.0074.0076.00

INR

Annual Capacity

• About 4,500,000 Lightweight – with expectation of up to 6,000,000 after new yards start operating

Number of Vessels

• 2016: abt 318 vessels / 3,400,000 ldt

• 2017: abt 232 vessels / 2,400,000 ldt

• 2018: abt 258 vessels / 2,100,000 ldt

• First half of 2019: abt 102 vessels / 800,000 ldt

Operating Yards

• About 131 yards operating out of 152, with the remaining 21 to be auctioned in the near future.

• SOC with the HKC: 77 - LR: 1 , NK: 31, Rina 59, IRQS: 11 (several yards more than 1 Class certification)

Note: All numbers are approximates


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400.00

450.00

500.00

550.00

600.00

650.00

Steel Prices Pakistan

100.00

110.00

120.00

130.00

140.00

150.00

160.00

PKR

Annual Capacity

• About 3,000,000 Lightweight

Number of Vessels

• 2016: abt 139 / abt 1,800,000 ldt

• 2017: abt 123 / abt 1,500,000 ldt

• 2018: abt 80 / abt 1,250,000 m ldt

• First half of 2019: abt 21 / abt 70,000 ldt

Operating Yards

• About 30 yards out of 135 (25%)

• None of the yards are HKC compliant



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330.00

380.00

430.00

480.00

530.00

580.00

Steel Prices Bangladesh

77.00

79.00

81.00

83.00

85.00

BDT

Annual Capacity


Number of Vessels

• 2016: abt 45 vessels / 600,000 ldt

• 2017: abt 197 vessels / 2,100,000 ldt

• 2018: abt 215 / abt 2,375,000 ldt

• First half of 2019: abt 160 vessels / 1,820,000 ldt

Operating Yards

• About 60 yards of about 150 (40%).

• 1 HKC compliant yard

• PRIMARY source of steel



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Currency (TRY):• end June 2016: abt 2.95 to the USD• end June 2017: abt 3.5 to the USD• end June 2018: abt 4.7 to the USD• end June 2019: abt 5.8 to the USD

Annual Capacity


Number of Vessels

• 2016: abt 121 vessels / abt 600,000 ldt



• First half of 2019: abt 70 vessels / abt 375,000 ldt

Operating Yards

• Currently 20 out 22 registered scrap yards

• 3 EU approved



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Annual Capacity of all currently approved yards

• Maximum recycled: about 795,000 ldt

• Theoretical capacity: about 2.6 m ldt

Number of Vessels

• Insufficient information (presently 1-2 known in Turkey)

Operating Yards

• 30 EU based yards

• 3 yards based in Turkey

• 1 yard in USA

EU approved yards:• Majority of EU yards operate mainly as

repair/building yards rather than focusing on recycling.

• Few of them have ability to recycle small ships

Source: EU Journal - COMMISSION IMPLEMENTING DECISION (EU) 2019/995


Why is Ship Recycling Environmentally Friendly?

Reduction in Greenhouse Gas EmissionThe positive effect of using scrap metal to produce finished products instead of using metal ore is seen interms of reduced GHG emissions. The emissions reduction is due to the reduced energy consumption byup to 70 percent in steel making using scrap steel as compared to using iron ore. Moreover, the need formetal mining is also diminished, which adds to the reduction of the GHG emissions. This is an importantcontribution of the ship recycling industry towards sustainability and decarbonization. Source:https://www.maritime-executive.com/editorials/five-facts-about-sustainable-ship-recycling

Reduction in pollutionThe recycling of steel scrap obtained from end-of-life ships reduces air and water pollution and alsowater consumption. These reductions are due to fact that fewer resources are required to manufacturesteel from metal scrap as compared to metal ore. Scientifically published estimates suggest 86 percentless air pollution, 76 percent less water pollution, 40 percent reduction in water usage while making steelfrom scrap than from iron-ore. Source: https://glescrap.com/scrap-metal-recycling-reduces-air-pollution


INFRASTRUCTURE


Impervious layer

Oily block cleaning zone

Oily equipment storage zone

Temporary waste storage facility

Clean block cutting zone

LPG

Primary block storage area

Oxygen tank

Rest room, first aid, training room, wash room, drinking water facility

Weigh Bridge

Gate

Non-ferrous storage area

ADMIN

Winch

Winch

Crane

Emergency Exit

Assembly point

Under ground storm water & oily water tank

INFRASTRUCTURE

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21

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Direct lifting of blocks from vessel using heavy Lift cranes reduces risk of accidents and environmental pollution

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INFRASTRUCTURE


Cleaning of oily blocks in impermeable floors (with drainage system) at yard minimizes risk of fire accidents and environmental pollution

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POLLUTION PREVENTION


Asbestos Waste Management

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HAZMATS


INCINERATION UNIT (CAPACITY 5MT/DAY) LANDFILL SITE (CAPACITY 130,000 m3)


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SAFETY - Workers with Adequate PPE


OTHER TRAININGS

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HUMAN RESOURCE DEVELOPMENT


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GMS-IRCLASS TRAININGS

HUMAN RESOURCE DEVELOPMENT


GMS’ Award-Winning Green Initiatives

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Industry Awards


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understanding environmental and regulatory aspects in … · 2019-11-21 · •eu ship recycling...

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