Home >Companies >APSEZ gets green nod to set up ship recycling facility at Mundra

Bengaluru: Adani Ports and Special Economic Zone Ltd (APSEZ) has received environment and coastal regulation zone approvals from a top government agency for setting up a ship recycling facility at its port in Mundra, Gujarat.

By getting into the ship recycling business, India’s biggest private port developer is looking to tap potential arising from global regulations on environmentally safe and sound ship recycling, which will limit the number of facilities where end-of-life ships can be dismantled unless they conform to these rules.

The Expert Appraisal Committee (EAC) in the ministry of environment, forest and climate change approved an application filed by APSEZ at its meeting on 29 June, according to the minutes of the meeting reviewed by Mint.

APSEZ too confirmed the approval.

The proposed facility, spread over 40.7 hectares, will recycle ships of up to 16,000 light displacement tonnage (LDT) or 80,000 dead weight tonnes (DWT) cargo carrying capacity. About 0.3 million tonnes of material is expected to be recovered from recycled ships at the facility every year.

LDT refers to the weight of the ship excluding general cargo, fuel, water, ballast, stores, passengers, crew, but with water in boilers to steaming level. One LDT is equal to 1 tonne.

The facility, to be located in Mundra taluk of Gujarat’s Kutch district, is hundreds of nautical miles away from Alang-Sosiya in the state’s Bhavnagar district, home to the world’s largest stretch of ship-breaking beaches.

The beaching method of breaking ships practised along a 12-km stretch of Alang-Sosiya is often criticized for its lax safety and health aspects. Under the beaching method, ships are first grounded during high tide and then dismantled, posing hazards to workers and the environment.

To be sure, ship recyclers in Alang-Sosiya have started upgrading their facilities to conform to global rules. Five of the 167 ship recycling yards located in Alang-Sosiya—R.L. Kalthia Ship Breaking Pvt. Ltd, Priya Blue Industries Pvt. Ltd, Leela Ship Recycling Pvt. Ltd, Shree Ram Group and Shubh Arya Steel Pvt. Ltd—have been certified by global ship verifiers for compliance with the Hong Kong International Convention (HKC) for the Safe and Environmentally Sound Recycling of Ships, that was adopted by the International Maritime Organization (IMO), the global maritime regulator, in 2009.

A further 17 yards have been appraised and audited by global agencies for compliance certification, according to the Gujarat Maritime Board, which oversees operations at Alang-Sosiya.

The IMO’s Hong Kong International Convention is, however, yet come into force because it has not been ratified by 15 states—representing 40% of world merchant shipping by gross tonnage (capacity) and a maximum annual ship recycling volume not less than 3% of the combined tonnage of the states.

The five yards have also applied to the European Commission to be included in its list of approved ship recycling facilities where ships flying the flag of a European Union (EU) member state can be sent for dismantling.

The European Commission will draw up a list of ship recycling facilities by December this year that have demonstrated compliance with the ship recycling regulation published by the EU in 2013. While the IMO convention does not prohibit dismantling of old ships by the beaching method, the ship recycling regulation published by the EU seeks to ban this method of dismantling ships.

“More and more yards in Alang are getting interested in getting HKC compliance certification," said Simos Dimitriou, an executive at GMS Inc., the world’s largest cash buyer of ships for dismantling. “The five HKC-certified yards are getting ships for recycling which none of the others can buy because of owners who are more into corporate social responsibility," he added.

“The HKC-compliant recycling yards are getting ships at lower rates. Yards that are strictly green are getting ships at 5-10% lower rates. They are seeing the benefits. Sooner or later there is going to be a requirement for other yards to be like those five," Dimitriou said.

Yards in Alang-Sosiya recycled 249 ships in the year ended March 2016, turning out nearly 2.43 million tonnes of steel.

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