Scrap and Recycling Ships Convention

The HONG KONG INTERNATIONAL CONVENTION FOR THE SAFE
and ENVIRONMENTALLY SOUND RECYCLING OF SHIPS, 2009 (known
as the Convention) was adopted in Hong Kong in the year 2009. The Convention is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment. It was found necessary to adopt the Convention in view of the role of the International Labour Organization in protecting the occupational safety and health of workers involved in ship recycling and also the role of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal in protecting human health and the environment against adverse effects ensuing from such waste.

Credit The Guardian

Applicability of Convention

The Convention describes a Ship as a vessel of any type whatsoever operating
or having operated in the marine environment and includes submersibles,
floating craft, floating platforms, self elevating platforms, Floating Storage
Units (FSUs) and Floating Production Storage and Offloading Units ,
including a vessel stripped of equipment or being towed. The Convention does
not apply to warships, naval auxiliary or other ships owned or operated by
a Party and used, for the time being, only on government non-commercial
service nor does it apply to ships of less than 500 GT or to ships operating
throughout their life only in waters subject to the sovereignty or jurisdiction of
the State whose flag the ship is entitled to fly.

Ship Recycling a Green Activity

“Ship Recycling” means the activity of complete or partial dismantling of a ship
at a Ship Recycling Facility in order to recover components and materials for
reprocessing and re-use, whilst taking care of hazardous and other materials,
and includes associated operations such as storage and treatment of components and materials on site, but not their further processing or disposal in separate facilities for this end of life demolition segment.Ship recycling is also an activity which is completely green in terms of reprocessing

Ship Recycling Facility

“Ship Recycling Facility” means a defined area that is a site, yard or facility
used for the recycling of ships. The Hong Kong Convention intends to address all the issues around ship recycling, including the fact that ships sold for scrapping may contain environmentally hazardous substances such as asbestos, heavy metals, hydrocarbons, ozone-depleting substances and others. It also addresses concerns raised about the working and environmental conditions at many of the world’s ship recycling locations and the establishment of an appropriate enforcement mechanism for ship recycling, incorporating certification and reporting requirements. Upon entry into force of the Hong Kong Convention, ships to be sent for recycling will be required to carry an inventory of hazardous materials, which will be specific to each ship and the country where the recycling has to take place will issue the required certification after stringent checking.

Accession

The Convention is open for accession by any State. It will enter into force 24
months after the date on which 15 States, representing 40 % of world merchant
shipping by gross tonnage, have either signed it without reservation as to
ratification, acceptance or approval or have deposited instruments of
ratification, acceptance, approval or accession with the Secretary-General.
Furthermore, the combined maximum annual ship recycling volume of those
States must, during the preceding 10 years, constitute not less than 3 % of their
combined merchant shipping tonnage.

Ratification

Sixteen countries have ratified the Hong Kong Convention including Belgium, Congo, Croatia, Denmark, Estonia, France, Germany, Ghana, India, Japan, Luxembourg, Malta, Netherlands, Norway, Panama, Portugal, Sao Tome and Principe, Serbia, Spain and Türkiye .The United States of America has not ratified the Convention. India has ratified the Hong Kong Convention. Of the approximate 45,000 ocean- going ships in the world about 800 are taken out of service every year.After Bangladesh accession to the Convention the minimum number of ratifying states required for the Convention’s global standards to become effective has been reached .The Convention will now become effective on 25th  July 2025. In South Asia a ship recycling owner typically purchases a ship to be scrapped for around $ 4-10 million .The ship recycling yard owners take loan from local banks at high interest rates and the loan is repaid in six months time when the ship is completely scrapped. Pressure is now on larger flag states to ratify the Convention including at least one with large recycling capacity such as China. Bangladesh, China, India, Pakistan and Turkey are the world’s top five shipbreaking countries accounting for more than 98 % of global shipbreaking by gross tonnage. India is the world’s  largest shipbreaking country and after its ratification the number of states required has now been reached.Approximately 10 % of the tonnage and 0.4 % of the recycling volumes need to be added before the Convention can enter into force.Bangladesh shipyards offer competitive prices and for container ships the purchasing band is $ 625 per l dt, tankers $ 605 and bulk carriers $ 575. Pakistan and India offer around $ 70 lower prices then Bangladesh.Türkiye which has ratified the Convention offers extremely low prices at $ 340, $ 330 and $320 for similar category of ships. Pakistan’s Gadani recycling shipyard , spread across a 10 km stretch, may soon turn into a veritable ghost town. Pakistan steel industry is heavily reliant on steel scrap obtained from Gadani ship breaking yards. Pakistan’s economy is beset by foreign currency availability and opening letters of credit for importing and purchasing ships for scrap is becoming increasingly difficult.

Sources International Maritime Organisation

Sea Trade Magazine

Hazardous Industry

The shipbreaking or scrap industry as more commonly called is perhaps the
most hazardous job in the world and no doubt its workers have a right to expect, a safe, healthy, clean and sustainable job. The Convention sets out a minimum standard and after India’s ratification of the Convention pressure is mounting on China, Bangladesh and Pakistan to ratify the convention

More than 800 large ships are scrapped each year mostly at Asia’s once clean beaches. Recycling yards compliant to the Convention  pay less so ship owners gain around $ 3-5 million per ship by selling to Asian yards and directly to cash buyers. Around 41 yards out of 120 in Alang comply to Convention standards whereas in Bangladesh only one yard complies to Convention standards.Bangladesh incorporated the articles into its national statutes and has now ratified the Convention.This will negatively impact on Pakistan as India and Bangladesh are guaranteeing sufficient regulatory compliance and  recycling capacity to attract European sellers as more ship breaking yards become approved by the European Ship Recycling Regulations.

 

Author Hafiz Munawar Iqbal

Advocate Supreme Court of Pakistan

Advisor Maritime Jurisdiction