Green: Re­form comes to ship-break­ing sec­tor

China Daily (Latin America Weekly) - - 13 Busi­ness -

Turkey, In­dia and Bangladesh still rely on man­ual meth­ods and out­dated equip­ment. Many scrap­bound ves­sels are still dis­man­tled on beaches.

Dong Li­wan, a pro­fes­sor spe­cial­iz­ing in the ship­ping in­dus­try chain at Shang­hai Mar­itime Uni­ver­sity, said some Western coun­tries now are ex­pect­ing South­east Asia to scrap aged ships, be­fore they up­grade their green re­cy­cling tech­nolo­gies in the ship-break­ing sec­tor.

In ad­di­tion to seek­ing new lo­ca­tions over­seas to re­sume their busi­nesses, many Chi­nese ship­break­ing yards have been adopt­ing new tech­nolo­gies to carry out their work, Dong said.

Their work in­volves higher costs of equip­ment, ma­te­ri­als, stor­age and work­ers’ pro­tec­tive wear. They are also seek­ing to di­ver­sify. Their sights are on aged off­shore en­gi­neer­ing plat­forms that can be scrapped, and ur­ban in­fra­struc­ture projects.

Dong said the govern­ment should en­cour­age steel mills to buy more scrap as raw ma­te­rial from do­mes­tic ship-break­ing com­pa­nies as a mea­sure to sup­port lowen­ergy-con­sum­ing in­dus­tries.

Smaller ship-break­ing yards need help to seek new growth points in other busi­nesses. Tax cuts or fi­nan­cial help to those pur­chas­ing steel-cut­ting equip­ment or ma­te­ri­als made in an en­vi­ron­men­tally friendly man­ner might prove use­ful, he said.

The China Na­tional Ship Re­cy­cling As­so­ci­a­tion said that in­stead of us­ing iron ore to make steel, if com­pa­nies use scrap from ship­break­ing yards, it can re­duce gas and wa­ter pol­lu­tion by 86 and 76 per­cent re­spec­tively. Such a prac­tice will also help cut 40 per­cent of wa­ter us­age and re­duce min­ing waste by up to 97 per­cent, it said.

“As an in­dis­pens­able part of the ship in­dus­try chain, the func­tions of ship-break­ing busi­ness have been ex­tended from re­cov­er­ing steel ma­te­ri­als to cut­ting emis­sions, en­sur­ing water­way safety and pro­duc­tion op­er­a­tions, as well as ship­ping safety,” said Dong.

His opin­ion is shared by Yang Jianchen, gen­eral man­ager of Zhoushan Hongy­ing Ship­break­ing Co. He said the world’s ship-break­ing in­dus­try is not only un­der pres­sure from the as­pects of ecosys­tem and oc­cu­pa­tional health but also fac­ing the re­al­ity of not mak­ing prof­its, squeezed as it is by cheaper steel scrap prices and over­ca­pac­ity in the steel pro­duc­tion sec­tor.

“Many ship-break­ing yards in Zhe­jiang have ei­ther closed or pas­sively stocked tons of steel scrap be­cause its de­mand and pric­ing rights are to­tally de­cided by the buy­ers. The use of scrap steel by mills had been re­duced by 50 per- cent in 2017,” said Yang.

“In the past, scrap con­sump­tion nor­mally ac­counted for 20 per­cent of crude steel pro­duc­tion, which is now less than 10 per­cent.”

He pre­dicted that the room for profit will con­tinue to be squeezed in 2019 by de­clin­ing steel prices and the high cost of en­vi­ron­men­tally friendly ship-break­ing meth­ods, af­ter China re­moved the sub­sidy rules for the de­mo­li­tion of ships at the end of 2017.

Coun­tries such as the United States and many Euro­pean coun­tries have adopted elec­tric fur­naces in steel­mak­ing to deal with scrap of cars, build­ings and other steel waste dur­ing the early de­vel­op­ing stage.

Their steel mills can use this tech­nol­ogy and use scrap steel as the main raw ma­te­rial, said Zhang Yongfeng, deputy direc­tor of the mar­ket re­search of­fice of the Shang­hai In­ter­na­tional Ship­ping In­sti­tute.

“Though many steel mills in China are still re­ly­ing on blast fur­naces that use iron ore as the main raw ma­te­rial to pro­duce steel prod­ucts, it would be eco­nom­i­cal and en­vi­ron­men­tally friendly to choose elec­tric fur­naces. They should up­grade their busi­ness op­er­a­tions, and in­ject growth mo­men­tum into the ship-break­ing in­dus­try,” he said.

Since new rules will kick in as early as next week, for­eign ships that have been hit by rocks, stranded, sunk or af­fected by nat­u­ral dis­as­ters or ac­ci­dents in Chi­nese ter­ri­to­rial wa­ters should re­ceive pri­or­ity while clear­ing the nav­i­ga­tion lanes, so as to en­sure port and ship­ping safety, said Feng Hao, a re­searcher at the In­sti­tute of Com­pre­hen­sive Trans­porta­tion, which is part of the Na­tional De­vel­op­ment and Re­form Com­mis­sion.

“In ad­di­tion, ships cur­rently owned by Chi­nese shipown­ers but fly­ing the flags of other coun­tries will face the is­sue of safe and en­vi­ron­men­tally friendly dis­man­tling af­ter re­ceiv­ing the clear­ing ser­vice,” he said.

“The coun­try also needs to de­ploy more re­sources and man­power to crack down on smug­gling ac­tiv­i­ties done through ves­sels bound for scrap­ping.”

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