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Shipbreaking in OECD

4 Shipbreaking capacity

4.1 Danish capacity

The principle Danish ship breaker is Fornaes Shipbreaking with a yard in Grenaa. The annual capacity is up to 10,000 GT (17,000 DWT) with a maximum length of 100 m roughly corresponding to 4-5 vessels of 2,000 GT. Most vessels broken until now have been smaller fishing vessels.

Denmark has a dormant capacity, e.g. in the dry dock in Nakskov and in Frederikshavn. The companies have not performed shipbreaking.

4.2 OECD capacity

The capacity for shipbreaking in EU and Europe has been assessed in CEC (2001). It was shown that regarding active shipbreaking yards the capacity was much lower than the demand if native vessels were to be recycled in EU or geographical Europe. Both in terms of number of vessels and dimension the capacity was exceeded. For the largest vessels (tankers approaching 400,000 DWT) only the dock in Gdynia, Poland, is sufficiently large. It is engaged in new-buildings and has not performed shipbreaking.

In the OECD countries only little capacity is left. Here the results of the survey of European OECD countries, and of other OECD countries previously active in shipbreaking such as Mexico, Turkey, Japan and Korea. A report directly addressing the shipbreaking capacity in the OECD is mentioned on the DNV homepage, but due to client restrictions it is not yet available. The above information is based on summary information in CEC (2001). No investigation on the possible capacity of Canada, France, Germany, UK and other OECD countries has been since they have a "high-cost" profile and no record of shipbreaking. The authorities in USA responsible for the obsolete Navy vessels have licensed four companies to do ship scrapping.

The direct parameter governing the capacity is the physical dimensions of the pier or yard and the depth of the harbour. But also other issues influence the overall possibilities of operating a shipbreaking yard, amongst these the demand for recycled steel (re-rolled and re-melted), used ship equipment, the availability of skilled/unskilled labour force and other infrastructure necessities.

Through some of the interviews carried out during the inception phase it has become apparent that the facilities might be present even though there is no or only limited track record of shipbreaking at a given yard (or country), and vice versa. A series of interviews have therefore been carried out - either by email or via telephone.

4.3 Countries

In Spain several ship yards along the Northern coast (mainly Asturias province) offer shipbreaking, presently directed at demolishing obsolete vessels of the large Spanish fishing fleet. The activity has declined dramatically since mid 1980íes due to stronger competition from outside Europe and in particular outside OECD territory. At present, dismantling facilities still exists in Asturias (2), Santander (1-2), Bilbao (1-2), Galicia (1-2) and Coruna (1). A number of yards contacted had in fact limited recent experience, but were still on the market for shipbreaking.

The majority of the yards are relatively small with approx. maximum length of the vessel of 100 m. One yard Desguaces de la Arena, which was inspected, had a pier capacity of 200 m and a history of scrapping vessels of this size. However, depth in the approach canal limits the capacity to vessels with a draught of 6 m. With respect to handling the environmentally hazardous waste in a safe and sound manner most yards makes use of a licenced disposal company. The inspection suggested that several issues regarding environment and health must be addressed to comply with draft guidelines.

Mexico is on the top 3 of OECD countries with respect to actual shipbreaking in OECD the last 8 years. The main cluster of ship breakers are in the Tampico and Tuxpan area. However, the Mexican shipbreaking industry is not very active at the moment. No inspection was performed due to time constraints and barriers at the yards.

One Mexican ship breaker appeared to have gone through an upgrade of the yard in order to be able to bid for the decommissioning programme for US Navy ships. The company was screened from the bidding and has recently ceased with shipbreaking and functions exclusively as a maintenance and repair yard. When it was active the company did pier breaking and were able to handle vessels up to 220 m long (Panamax size).

The beach shipbreaking activities in Turkey are not very old and it was anticipated that a dormant capacity in terms of pier/dock breakers could be found. Despite the efforts of the Turkish Chamber of Shipping and the Turkish embassy in Denmark no information is available from the Turkish Association of Ship Breakers or the "Undersecretariat for Maritime" in Turkey. All listed ship breakers in Turkey are situated in association with Aliaga beach.

It is apparently a very limited amount of shipbreaking that takes place in Portugal. Not only are two vessels recorded as scrapped and demolished in Portugal over the last 8 years. The company Joao Luis Russo & Filhos Lda. were interviewed but they are no longer active in shipbreaking and did not know of any other Portuguese company that is currently active. Furthermore, the two recorded demolitions were carried out in 1995 and 1996 so it could appear as if the capacity in Portugal no longer exists.

In Italy there are a few ship breakers with the capacity to do shipbreaking of oceangoing vessels. Most are clustered around Naples, which according to one of the ship breakers interviewed is the only harbour in the country with a license to do shipbreaking. Two companies were interviewed, Rotrafer and Simont. Both companies employ pier breaking with breaking of the keel in a floating dock or dry dock. The quay length is approx. 200 with an option at Simont to rent up to approx 300 m length. The maximum vessel dimensions must be evaluated case by case.

Upon inspection at Simont in Naples it was stated that a 330 m dock is available. Their capacity is some 70-80 thousand tonnes steel per year corresponding to 14 vessels of 25,000 DWT (present turnover approx. 30 thousand tonnes by some 30 vessels). The company has an ISO 9001 certification. Most contact with authorities regards workers environment to agencies ASL and ISPESL and to local government of Regione Lombardia.

Several companies have been contacted in Greece as has the Greek Embassy in Copenhagen. Shipbreaking is reportedly very limited if it even exists. This is perhaps surprising given that the Greek hold by far the largest tonnage among BIMCO members and given that BIMCO represents about 66% of the world tonnage.

In the Netherlands a ship scrapping company, called Scheeps Sloperij Nederland is available at a location in Gravendeel. They are capable of handling (maily inland) vessels and coasters up till 100 meters length and a depth of about 6 meters. The Netherlands authorities report that the company scraps in an environmental sound way, including facilities to prevent water pollution, oil/watertreatment system, asbestoshandling (if necessary), etc.

There are no yards to dismantle large tankers or cargo ships in the Netherlands. In theory some repair yards might have the facilities to dismantle large sea going vessels in a dock, but these docks are not capable of handling the VLCC or ULCC types
(Luttikhuizen, 2002).

South Korea and Japan, which were actively engaged in ship recycling in the early 1980's have completely withdrawn from the scene. No active shipbreaking could be identified in either country. One company in Hiroshima demolish salvaged wrecks and fishing boats, but does not have the capacity for larger vessels and have no wish to be inspected.

4.3.1.9 Poland

The large ship building and repair industry in Gdynia/Gdansk has the capacity, but there is no active shipbreaking in Polish yards. The ship building industry in Poland has recently been under financial reconstruction.

4.4 Global scale

The global current capacity can be estimated to range between 7.7 mill. LDT and 9.4 mill. LDT. On a global scale the capacity, including the all existing shipbreaking sites, no constraints in global shipbreaking capacity are foreseen. If additional tankers are phased out, according to the "IMO Case" scenario, capacity constraints could arise in 2005 and into 2006 depending on the possible mobilisation of dormant capacity.

4.4.1 Summary

Denmark has at present no capacity to demolish ships with the size profile of it's merchant fleet.

Within OECD the present capacity for shipbreaking is relatively small and the existing capacity cannot demolish large vessels (>50,000 DWT). Even breaking up of vessels larger than 25,000 DWT may require modifications at the demolition yards. Unless dormant capacity is revived in OECD larger vessels must be broken elsewhere. At present the only OECD potential capacity for large tankers e.g. VLCC and ULCC, is the beaching in Turkey, which may in reality not be suitable due to lack of tidal gauge, unconfirmed facilities in Mexico, and a yard in Poland, which is not engaged in demolition.

On a global scale the capacity, including the all existing shipbreaking sites, no constraints in global shipbreaking capacity are foreseen. If additional tankers are phased out, according to the "IMO Case" scenario, capacity constraints could arise in 2005 and into 2006 depending on the possible mobilisation of dormant capacity.