Examination of Witnesses (Questions 20-39)
30 JUNE 2004
MR MARK
BROWNRIGG, MR
EDMUND BROOKES,
CAPTAIN NIGEL
PALMER AND
MR TOM
PETER BLANKESTIJN
Q20 Joan Ruddock: But even though you
have not got green passports yet on such a scale you cannot monitor
them, nonetheless ships do have hazardous materials taken out
of them prior to recycling?
Captain Palmer: Yes.
Q21 Joan Ruddock: Have you any idea what
proportion of ships actually have that removal of hazardous materials
before the recycling process?
Captain Palmer: I cannot answer
for the whole industry, I can only answer for what we did. We
took off the ships before they went to China the items that we
could take off leaving the ship still in a safe condition to undergo
the passage, because you cannot remove everything, and then what
was left on board (part of this whole process that we developed
with the yard was to know exactly what had happened to everything)
had to be fully auditable. We have photographs of the bricks that
were made out of the scale that came out of the bottom of the
cargo tanks, for example, and things like that. So we did take
it to quite a reasonable extent to determine that it was being
done properly. I guess in the context of what you are talking
about in this Committee the question really is, is this an industry
that can be done properly. I think the answer is, yes, it can
be. Does it perform a necessary service? Yes, it does. Seven hundred
ships on average a year have to be recycled and reusing those
materials is actually the best thing to do with them, not to actually
dump them somewhere and hope the problem will go away.
Mr Brookes: I would like to add
one aspect, to come back to the heart of your question, which
was, are the hazardous materials removed. Even in ships which
are not processed and recycled in a way in which we would particularly
recommend, the hazardous materials are still taken off. The asbestos,
the lube oils, the lamp bulbs, the computers, those sorts of things,
they are all taken off and recycled, even in India and Pakistan,
but they would not be done in the way which we are putting forward
to you now. So these materials are taken off even on those ships.
Q22 Joan Ruddock: Sure. The clear implication
in my question is that these things are taken off in a proper
manner?
Mr Brookes: In a proper manner,
yes.
Q23 Joan Ruddock: Otherwise, essentially
you are just in break up, are you not, and things come off as
they come off, but there are ways of taking things off in a contained
way quite separate from the break up?
Mr Brookes: Even in Pakistan and
India they will deliberately try to take those off to get value
from them, to recycle them. They have value to them. Even light
bulbs will be reused in India and Pakistan and they will find
a use for the asbestos.
Mr Brownrigg: Almost the entire
ship is recyclable, so there is an economic interest, if you like,
in those countries to do so.
Captain Palmer: I think the big
issue with India, Pakistan and Bangladesh is the safety of the
people rather than necessarily what happens to the end materials.
Clearly there is environmental damage goes on there as well as
part of the process, which does not happen in China, but the big
issue for us was what happened with the people. This is a personal
thing, but I do not believe you should hurt people when you are
doing your normal business.
Q24 Joan Ruddock: Exactly, and clearly
there is both a human cost and an economic cost where things are
not done correctly, but what is the cost of doing things properly
and following these guidelines and is it acceptable to people
in shipping that the shipowners should bear that cost?
Mr Blankestijn: What our experience
was of course was a one to one relationship and it was not a market
mechanism, so therefore it was very difficult to see. It was an
investment from both sides. If I were to calculate the process
of what I call the pre-cleaning, so taking off and stripping the
ship of all its hazardous materials, that would cost you about
US$30 maximum in Asia. That is per tonne. That is a very minor
cost element. If you compare that with a Western factory where
labour is much more expensive, you would be doubling, tripling
the cost, probably. But the most important thing is to make the
process before you reach the yard as smooth as possible: so, the
identification of the hazardous materials, locating them, marking
them so that also the people who have to work with the dismantling
of the vessel and the taking off of the hazardous material can
recognise where they are. If you go on the street and you ask
people what is asbestos, everybody is talking about asbestos but
nobody can recognise it. So it is important for people to be trained
in a proper way and guided on these processes and that is already
half of the cost elements involved.
Captain Palmer: I do not have
much understanding of the way the steel industry works, but effectively
scrapyards pay you on a lightweight tonne of the ship, so it is
the weight of the ship effectively. It is not the gross tonnage,
it is the actual steel weight and so on of the ship. A ship will
vary in weight between sizes, for example a ship of 20,000 deadweight
tonnes will be about 7,000 tonnes of lightweight, up to about
50 to 60,000 lightweight tonnes for a very big one. The market
prices will vary quite enormously depending on the economic demand
for steel and they will go from a low of round about $100 a tonne
that they will pay you for the ship up to $400, I think, today.
So it is an enormous variation. So what you get by going to a
facility that does it properly are two things. First of all, if
they know that you will not go anywhere else then they have a
slightly better bargaining position where you will probably agree
a lower price and you do not have the opportunity, perhaps, to
have as wide a set of people bidding for your ship as might otherwise
be the case. So it does cost you because you will not get paid
as much as you would have been. Is the cost acceptable? Yes. Well,
it certainly is to us. Does every owner take the same attitude?
We cannot answer that, you would have to ask them directly, but
the actual cost to us was somewhere round about $500,000 per ship.
Q25 Joan Ruddock: My final question is
about your own body's standard operating procedure. Could you
just give us a little idea about what does that cover and what
your experience is of actually operating that procedure?
Mr Blankestijn: We documented
it fairly clearly and it starts off the moment you take the executive
decision that you are going to phase out the ship, up until the
preparation of the headquarters, making the contact with the yard,
the facility, then making the inventory by head office clearly
marking the hazardous materials and doing radiation surveys and
all kinds of things. Then we hand over all that information to
the ship's crew and the ship's crew will then follow that same
list and will complement it or add to that because they have more
knowledge about the ship than maybe the drawings at head office.
Once that is done, the ship is handed over to the yard, but at
the same time at the yard are two supervisors of our company guiding
the process of the pre-demolition cleaning. Once that is done,
we say for us here it finishes, of the hazardous materials. Then
you have the final demolition of the ship, which is then also
identified, which is actually cutting the steel. In the meantime,
they also talk to the national government in order for the waste
management. That is the whole process which covers our operational
procedures and if you bear in mind that if you normally sell a
ship as a shipowner you do not have any legal obligation whatsoever
to further watch it, it goes rather deep into the whole matter.
Joan Ruddock: Thank you.
Q26 Chairman: Could I just follow up
for the sake of clarification because all your remarks so far
have been predicated on the fact that you, as the responsible
shipowners seeing the process through, go beyond, if you like,
what your statutory requirements are in the way you have described.
But looking at the document you have provided to the Committee,
the Code of Practice, for example you said in paragraph 2.6: "In
such circumstances, the decision on which recycling yard to select
rests with the middle buyer rather than the shipowner."[6]
What I am not clear about is what influence you may have on third
parties who may buy your ships because you know what your policies
are but do you actually have any leverage over the disposal methods
of third parties?
Captain Palmer: I think it depends
on the circumstances in which you were selling the ship. If you
are talking about a ship that has still got 10 years of its life
left, then it is a bit like selling a car after you have owned
it for three years. You probably do not know what happened to
it. But if we are talking about something that is at the end of
its life, if we are using a third party to act as an intermediary,
which we do because it is easier in some ways, then we will limit
the number of yards that they can approach, so they will have
to be ones that we have approved and we will have a final right
of veto over which yard it is sold so. So those guidelines are
general guidelines but not the ones that are in practice to be
followed.
Q27 Chairman: You talked about the yards,
but Mr Blankestijn has just detailed a very specific methodology
which has to be followed. Would you also require your third party
to adhere to the same rules that you as companies would follow?
Captain Palmer: Absolutely, but
despite the fact that we might have used a third party to act
as an intermediary we would still follow it right through and
we would have our own people in there as well. So the use of intermediaries
is a mechanism for accessing the trade market rather than the
actual final responsibility for it.
Q28 Chairman: You represent two known
major important companies. Would it be fair to say that there
may be some who would not be as rigorous as you?
Captain Palmer: That is quite
possible.
Mr Brownrigg: I am sure that is
the case, but then you have to recall that the code was developed
with these other international groupings. BIMCO alone, the first
one I read out, I think has 70% of the world's fleet in membership.
So the breadth of support for these practices, albeit of a voluntary
and recommendatory nature, I think sends that message. Now, of
course it does not necessarily compel at the end of the day, but
it sends the message.
Q29 Mr Lepper: Are there countries or
companies which are not signed up to the International Chamber
of Shipping?
Mr Brownrigg: Oh, yes. Thirty-five
or thirty-six countries are signed up to it, but if you take the
list that is in 1.2 of the industry code that was sent to you,
these really do cover a huge proportion of the world fleet, whether
it be in the tanker sector, the dry bulk carrier sector, across
the board in the case of BIMCO, etcetera.
Captain Palmer: It raises an issue,
which is why IMO has been so important in getting those guidelines
through because it is the only body which acts globally and there
are one hundred and sixty odd members of IMO, which represents
virtually every country that is involved in maritime activities.
The necessity to get those codes adopted by IMO was precisely
that reason, to try to get a wider cross-section than just those
who were members of the ICS.
Q30 Diana Organ: Could you see a time
when under the guidelines for the IMO there might be a penalty
against a shipowner, a fine if they are not seen to be keeping
to the guidelines, because at the moment it is only voluntary?
Mr Brookes: Could I take that
from a regulatory perspective. The IMO produces guidelines, statutes,
regulations governing the operation of a ship. Those guidelines
only have the force of law when they are implemented by the member
states of IMO, such as the United Kingdom is. So it would be the
United Kingdom which might choose to have its own legislation
in that respect, having implemented an IMO statute.
Mr Brownrigg: I think this is
fairly early stages in the legislative process. I am not just
thinking of this one but any maritime legislation. Sometimes they
begin as guidelines and move on into stronger instruments and
sometimes they stay as guidelines because that is a more practical
expression of the need in that context and it may be a little
too early, I think. What one wants to do is look ahead to the
implementation of those guidelines and the IMO monitoring of that
process.
Q31 Mr Lazarowicz: As we know, the movement
of hazardous waste between countries is controlled by the Basel
Convention. I understand there is some disagreement or argument
as to whether or not it was meant to apply to shipping at all.
Can you tell us why this confusion over the status of the Basel
Convention in regard to ships destined for dismantling has arisen?
Mr Blankestijn: The Basel Convention
was of the opinion that the hazardous materials—some of
these materials are on the red list of Basel—made the whole
ship hazardous and that is the way of thinking of Basel, where
they say if you then send the ship for its last voyage for recycling
then it becomes export. With that we disagree because we do not
think that a piece of hazardous material on board the ship makes
all the ship hazardous. A ship is not hazardous waste, the ship
generates waste, and that is a crucial point. Now, of course there
is some pressure from environmentalists who want to prove the
point that the whole industry of ship recycling has to change.
That is why the issue is pushed so much on Basel at this stage.
That is no complaint, it is a given fact at this moment. But what
will that do to shipowners? It is easily to be circumvented because
you can not declare your ship for the last voyage. You sail into
international waters and then the Basel Convention does not apply
any more. So what presently is then available? From our perspective,
Basel does not make it practical for what you want to achieve.
That is why it is so important, and it is what is being promoted,
that Basel, IMO and ILO should sit together and look at their
individual guidelines and make them complementary to each other.
As this is a global issue, you have to look at it as a global
issue and not look at it singly, the word "export",
but look at it from a practical point of view.
Mr Brookes: Could I add one point
to this, please. A ship cannot sail unless it has all its relevant
certificates in place. That means all the hazardous materials
that we are concerned with have to be on that ship to enable the
ship to be in full working order until it arrives at where it
is going to be recycled. The alternative is to remove all those
materials somewhere else and tow the ship as an empty hulk around
the world, which is (a) impractical, and (b) probably very dangerous.
So the ship is still a living object with all its certificates
in place; it is not a scrap item until it arrives at the final
point of destination, and that is one of the issues which the
Basel Convention does not apply, which is why there is this current
misunderstanding.
Captain Palmer: We would argue
that a ship is not per se a hazardous item, it is a large
unit which contains some materials that when they are taken out
are potentially hazardous if they are not managed properly. It
is not quite the same thing as having, I don't know, a container
full of asbestos and shunting it around the place trying to get
rid of it in the least acceptable place.
Q32 Mr Lazarowicz: I think, Mr Blankestijn,
you were talking about discussions taking place. Is that the joint
working group of the IMO?
Mr Blankestijn: The joint working
group, which is planned for the end of October or November this
year.
Q33 Mr Lazarowicz: I do not know a great
deal of how the international maritime legal process works. Are
these working parties bodies that report within a reasonable period
of time? When do we expect to have some outcome from these discussions?
Mr Brookes: Provided it comes
to some conclusions, that will report to the Basel Convention
and the International Maritime Organisation, hopefully in early
2005, and that can then be incorporated into revised IMO legislation
and that will go through the system at IMO to effectively give
it the force of law. We are talking about discussion of that and
then it will be subsequently implemented into national legislation
in the countries of the IMO.
Captain Palmer: The speed that
legislation moves through the IMO is not in the hands of the shipping
industry, it is in the hands of the nation states that are members
of the IMO and some of them can be done very quickly, as has recently
been seen with the international security (ISPS) code, which has
gone through in a remarkably short space of time, as against the
HNS (Hazardous and Noxious Substances) Convention, which has been
sitting there for 10 years unratified.
Q34 Mr Lazarowicz: At this stage, what
do you assess are the prospects of getting any successful resolution
of the disagreement?
Mr Brookes: I think there is a
good prospect because I think, as a result of the discussions,
the publicity, a real issue has been identified. We have explained
to you the misunderstandings of those who are not as well briefed
as, say, everybody in this room and therefore there is a determination
in IMO and the other bodies to come to a conclusion swiftly, and
it can do so, as the previous Secretary General of the IMO has
proved recently.
Q35 Mr Lazarowicz: Notwithstanding the
fact that there is this discussion under way or about to begin
in concrete terms, we do of course have the EU Waste Shipment
Regulation in force, I understand, at the moment?
Mr Brookes: Yes.
Q36 Mr Lazarowicz: What impact has this
had on the recycling of vessels in the EU and what impact in particular
has it had on EU-flagged ships being dismantled in developed countries?
Mr Brookes: None that I am aware
of.
Q37 Mr Lazarowicz: Has it had an effect
on recycling of ships in the EU to any significant degree in terms
of the present practice?
Mr Brookes: No.
Q38 Mr Lazarowicz: Finally, if the working
group were to come up with an outcome which reflected your views
on the status of the Basel Convention, would that not have an
impact on the status of the EU regulation?
Mr Brookes: I would have to read
the EU regulation again. I do not know every line, I am afraid.
Mr Blankestijn: That is a very
difficult question to answer. What is actually missing is the
legal framework in all three guidelines presently, ILO, IMO and
Basel. There is a possibility and the Dutch and the Canadians
are working out a proposal to IMO and Basel at this moment where
the reporting system of hazardous material of Basel is kept as
a whole because there is importance in that, where say the IMO
structure is also taken in place and try to bring that together.
Now, if that proposal comes then that could be the legal framework
for IMO and Basel to proceed in a quicker way.
Q39 Mr Lazarowicz: I suppose what I am
getting at is if the EU regulation is based upon one interpretation
of the Basel Convention requirements and that is not what eventually
becomes agreed amongst the parties then we could have a situation,
perhaps, in which there is no EU regulation in place until such
time as the EU changes its legislation in line with the outcomes
of the working group?
Mr Blankestijn: All I would like
to add is that this is, in our opinion, a global issue and we
should try to solve it globally, otherwise we get competition
between EU and other states where there easily could be a threat
of, say, trying to circumvent the EU regulation again. So we have
to come to this as a global solution.
Mr Lazarowicz: Thank you.
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