22� 20 November 2015VIEWPOINT

The Indian shipbreaking centre of Alang is, depending on who you speak to, either threatened by clo-sure amid a wave of heavy losses and bankruptcies or witnessing its rebirth, led by a handful of for-ward-thinking, environmentally conscious entrepreneurs.

One thing is certain: a line in the sand is being drawn between the “concrete-ers” and the stuck-in-the-mud brigade.

Priya Blue Industries, a plot established in 1994 and run by father-and-son team Sanjay and Gaurav Mehta, is one of the more forward-thinking pockets of Alang, although it remains the exception rather than the rule. A sizeable backyard for clean cut-ting and storage, and a building to accommodate workers and man-agement offices, are among the features that sets it apart.

But most breakers still need per-suading to upgrade their facilities and their intransigence is in dan-ger of overshadowing the progress that is being made by some at the the world’s largest ship-recycling complex.

In an overview of recycling in India, Bloomberg concluded: “Op-erations have improved recently in Alang but they’re nothing com-pared with the quiet transforma-tion of China’s shipbreaking in-dustry. “

And Brussels-based pressure group NGO Shipbreaking Platform says that even though Priya Blue and other yards have invested in improvements to meet the Inter-national Maritime Organization (IMO)’s Hong Kong International Convention for the Safe and En-vironmentally Sound Recycling of Ships (HKC), it added: “Whilst the cementing of the secondary cutting zones, installation of a drainage system and improved sorting of hazardous materials are welcome developments at these yards, concerns remain relating to the dropping of blocks by the use of gravity in the still unprotected tidal zone.

“Also, workers’ rights issues and downstream waste management were most likely not subject to the ClassNK certification, as this re-mains outside the scope of of the Hong Kong Convention.”

Japanese classification society ClassNK has, following a gap anal-ysis, recognised Priya Blue and RL Kalthia as the first Alang yards

A clear line has been drawn in the Alang sandThe intransigence of beaching yards at the world’s largest ship-recycling complex that still need persuading to upgrade their facilities could spoil it for everyone, writes TradeWinds Events director Jon Chaplin, who recently made an independent visit to Alang

►lEEla shIP rECyClINg: Hoping to win SOC certification from Class NK.

bring Indian yards to a standard that complies with the HKC.

Following a recent public en-dorsement by the Asian Ship-owners Forum — an increasingly influential trade body that repre-sents owners from Japan, China, Chinese Taipei, Hong Kong, Aus-tralia, India and South Korea — RL Kalthjia yard boss Chintan Kalthia sees a major chunk of his future business coming in future from owners based in the Far East, al-though he believes European own-ers will ultimately be convinced to use HKC-compliant yards as more are upgraded with the help of spe-cialist consultants such as Green Ship Recycling (GSR), ClassNK Consulting Service and Lilley Maritime. Some evidence already supports that claim. Despite the well-publicised rejection of beach-ing by the Norwegian Shipowners’ Association (NSA), the next vessel to be recycled will be the 33,000-dwt Bow Victor (built 1986), a Nor-wegian chemical tanker.

Others clOse tO sOcShree Ram and Leela hope to re-ceive their SOC certificates within a matter of weeks. Shree Ram has a long-term relationship with Stolt-Nielsen, having recycled around 20 of the owner’s vessels over the years. At first glance, the yard resembles a well-maintained seaside park with trees, shrubbery and benches — a far cry from the image most have of shipbreaking in Alang.

Leela managing director Kormal Sharma’s business interests now extend well beyond shipbreaking and include ownership of a Bhavna-gar newspaper, Leela Diamonds, which supplies high-end jewels to famous Western brands, and the construction of a local hotel.

hazardOus materialsAs well as moves by the Japanese government to improve recycling standards in India for its owners’ ships, Kalthia believes its interest also extends to Japan’s shipbuild-ers, with new vessels now being built with eventual demolition in mind. He points to the relatively small amount of hazardous waste recovered from the most recent 2000-built capesize recycled at the yard. “The last one had only 4.5 kilograms of asbestos containing material. Only gaskets,” he said.

Vessels being beached at yards with HKC-compliance certificates

compliant with the HKC, award-ing them Statement of Compli-ance (SOC) certificates .

Unfortunately, owners are not flocking to open their wallets and assist financially with upgrad-ing of yards by sacrificing some of the residual value of their vessels and ensure Alang’s long-term sur-vival — despite its critical role in disposing of their end-of-life ton-nage.

Conditions for the workforce in Alang is tough by Western stand-ards. A worker can expect to earn between INR 200 to 300 ($3 to $4.5) for a hot and dirty day’s work. For the majority of shipbreakers in Alang, a less rigorous approach to-wards safety and environmental control appears to be the norm, with blocks sitting in the sand where they fall and mounds of de-bris to be picked over.

In contrast, upgraded yards have showers, rest rooms, and in some cases on-site “colonies” —hous-ing, albeit basic, for the workforce. Several have dedicated medical rooms with doctors visiting twice a week. General conditions within the gates of HKC-compliant yards compare favourably with living conditions for the locals lining the road between Bhavnagar and Alang.

Priya Blue boasts of being the larger of the two HKC-compliant yards, having started preparing

for compliance by laying down concrete in 2013.

Compared with the very basic facilities of many Alang break-ers, the site has eight winches, potentially enabling it to handle a VLCC and suezmax simultane-ously, although, at the time of my-visit, the yard had been empty for three weeks. Well-known vessels to be torched at Priya Blue have in-cluded the tanker leviathan Jahre Viking (ex-Seawise Giant, built 1979) and the transatlantic liner-come-cruisehip SS Norway (ex-France, built 1960). An eclectic assortment of memorabilia from these iconic ships is tucked away in a backyard storage shed and includes a blue steel plate emblazoned with the name Norway.

the cOst Of cOmplianceThe cost to recyclers of upgrading a typical plot is between $100,000 and $120,000 and up to $160,000 for a larger plot, plus consultancy fees of around $65,000.

Rahul Varma of Lilley Mari-time, one of the consultants cur-rently active in Alang, argues that shipowners should share the expense.“This is the point that all Alang is making. If you want us to improve, we will improve. But give us a hand,” he said.

The cost does not appear pro-hibitive given that a plot owner could claw back the initial outlay

to achieve HKC compliance from a single vessel sale if the owner/cash buyer would accept $20 to $30 per ldt less for the ship.

However, stresses Varma, up-grading is not a one-off expense as it involves also ongoing invest-ment in training, equipment and concrete replacement. “It is a con-tinous cost,” he said.

However, convincing shipown-ers to shell out remains a distant hope. Priya Blue’s Gaurav Mehta estimates that only one or two owners out of every 100 are will-ing to “bite the bullet” and take a hit of $20 to $30 per ldt on trans-actions.

ClassNK has been working to

►gauraV MEhTa: Director of Priya Blue Industries in Alang.

►rl KalThIa: One of two plots at Alang that are now HKC-compliant along with Priya Blue Industries.

Photos: jON CHAPlIN

20 November 2015� 23viewpoint

As an example of the way a hand-ful of Alang yards have sought to counter criticism levelled at beaching by pressure groups such as Brussels-based NGO Shipbreaking Platform, Priya Blue’s site features segregated areas for oily parts and machin-ery, with a steam powered jet for cleaning and dedicated drain-age tanks to prevent oily water seeping into the soil or sand.After cleaning, the blocks are moved to a “clean” area for further cutting.

Cranes are used for moving

blocks and steel plates around the yard, which says it seeks to clean as much as possible prior to sections being cut and moved onshore. Production (demolition) is consequently longer for Hong Kong Convention (HKC)-compli-ant facilities, given the extra care taken over where blocks fall, cleaned and are cut into smaller pieces.

“It may take us six to seven months to break a VLCC,” said Priya Blue director Gaurav Mehta. This is around two months longer

than non-compliant rivals.Mehta points to a tougher ap-

proach also now by the Gujarat Pollution Control Board (GPCB). “Nowadays, GPCB has become so stringent, not like before. They are really strict about it. You can’t get cutting permission until the oil is removed and the tanks are clean.

“Any sand or sawdust used in the cleaning process is put in a proper bag and sent to Gepil [the local incinerator and landfill site].”

Extra carE with oily watEr

►block cleaning: Oily water is channelled away into a holding tank at this block cleaning station at Shree Ram.

must be delivered with Inventory of Hazardous Materials (IHM or hazmat) certificates, meaning that the disposal of hazmats can be ar-ranged in advance, either at the lo-cal incinerator and landfill site run by Gujarat Enviro Protection and Infrastructure Ltd (GEPIL) or fur-ther afield, depending on the exact nature of the material. The GEPIL landfill has around 10 years’ life left before a new site will be needed.

However, Priya Blue director Gaurav Metha laments the fact that not all owners are willing to fork out the relatively modest sum of $15,000 to produce an IHM. “There are some owners, they are really rich, and they don’t give an IHM,” said Metha.

Rahul Varma adds that recyclers are not granted permission to start cutting until the Gujarat Pollution Control Board (GPCB) has verified that the tanks are gas free, cleaned and it is safe for “hot work”.

Future in doubtBut as of today, the majority of shipbreakers in Alang remain to be convinced that investing in imper-meable flooring, segregated areas for cutting, proper drainage, waste handling and worker training will pay dividends. One cash buyer went further in his assessment of the predicament facing Indian re-cyclers, saying a “question mark” hangs over Alang’s future.

Initial support for upgrading from Ship Recycling Industries (SRIA) leadership has waned as breakers struggle to deal with cheap Chinese steel-billet im-ports, a sustained fall in the price of scrap steel, a weakening rupee and greater scrutiny of deals by the financing banks — a combi-nation of factors that has led to bankruptcies and many plots sit-ting idle. Local lending banks are said to have set up an informal ad-visory group of breakers to advise on the viability of trades present-ed for financing, with the aim of avoiding more bankruptcies.

Meanwhile, ClassNK is said to want to see how the HKC-compli-ant yards perform before working for others. Other members of the International Association of Clas-sification Societies (IACS), includ-ing Rina and the Indian Register of Shipping (IRS), are known to be actively pitching for certification work.

At least one of the HK-compli-ant yards, RL Kalthia, will apply to

►close links with cash buyers: (From left) Vijay Agrawal, chief operating officer (ship sales), Leela Broking Agency; Komalkant Sharma, managing director, Leela Group; and Shallendra C Bhardwaj, manager safety, health and environment, Leela Ship Recycling.

►hard life: But this worker at RL Kalthia is one of the lucky ones compared with yards that have not upgraded.

join the European Union (EU) list of approved yards, due to be pub-lished by the end of 2016, although an appeal through the courts, in the event of rejection, is consid-ered unlikely at this stage.

The yards who have achieved HKC compliance, and the others upgrading, believe they are doing enough to earn a place on the EU list but when pressed further, the prospect of being excluded is met with a resigned shrug. This is de-spite, say the breakers, more own-ers inspecting their facilities and blue-chip names, encouraged by ClassNK certification, now view-ing Alang as a viable option.

Shared FeatureIt must be noted that a common characteristic of the handful of yards that have obtained, or hope to obtain, an SOC is their close links to cash buyers. Leela, owned and run by Komal Sharma, the brother of Dr Anil Sharma of Global Marketing Systems (GMS). RL Kalthia is close-ly associated with Singapore-based Wirana Shipping, Priya Blue with Best Oasis, Shree Ram with NKD Maritime, and JRD with Singa-pore’s Ace Ship Recycling, whereas Lucky Group is currently develop-ing its own cash-buying arm.

Such cash buyers have identified the potential long-term benefit of being able to offer their shipowner clients a green recycling option beyond China, and the real reason for their close association with recyclers is that it allows them to share with the breakers the “green premium” paid by owners who re-ceive a lower price per ldt.

(Trade­Winds­ Events­ organises­ the­annual­ TradeWinds­ Ship­ Recycling­Forum.)

►shree ram: Chetan Patel of Shree Ram (left), where Stolt-Nielsen has been a long-time customer, and Akira Aoyagi, chief adviser, ClassNK Consulting Service.