Iceland’s national broadcasting company broadcast an investigation last week into the demolition of two vessels formerly owned by Iceland’s leading container carrier Eimskip.
Under a complex sale and leaseback agreement, the ships Godafoss and Laxfoss ended up being dismantled on the beach at Alang.
The export of end-of-life ships to South Asian shipbreakers is regulated by environmental law in Iceland. It was reported that the deal had been referred to prosecutors for investigation.
According to the broadcast, Eimskip sold the ships to companies controlled by noted cash buyer GMS, which is the world’s leading specialist in demolition sales to South Asia. As part of the agreement, Eimskip chartered the vessels back for several months and continued to use them in its commercial operations.
VesselsValue’s data shows that 1,465 TEU ships were sold to the Liberia-based entities Nova One Maritime Inc. and Melinda Maritime in December last year. It is alleged that these companies are controlled by GMS. Both ships were subsequently delivered to Indian scrapyards, in June 2020.
Earlier this year Eimskip cancelled the charters early, citing poor market conditions, and stopped using the vessels.
The new owners then sold the ships on to a shipbreaker in Alang, where they were beached and demolished.
The TV programme described those owners as GMS-controlled Liberian holding companies.
NGO Shipbreaking Platform alleged that “what may have seemed like a sale for further operational use was actually a scrap deal – Eimskip’s counterpart to the sale was none other than GMS, one of the most well-known cash buyers of end-of-life ships. GMS is behind nearly half of the total tonnage that has been beached in the Indian subcontinent so far in 2020. The company has also been linked by media and civil society to several toxic trade scandals, at least two of which are currently being criminally investigated by enforcement authorities in the UK.”
Iceland’s Environment Minister Guðmundur Ingi Gudbrandsson said on the programme that “the owners of these companies must respond to whether this is, in their view, morally acceptable, and if this is in line with the environmental and social responsibility policy that they set for themselves. That is the question that I, and I believe many others, were left with.”
Eimskip’s response was that, although it had been operating the vessels under a leaseback deal, it was the new owners, not Eimskip, who made the decision to sell the vessels for recycling in India. “It was not Eimskip’s decision to recycle the vessels, neither where, when nor how they would be recycled.”
Eimskip said that it when it checked with the Environment Agency of Iceland on Friday, it learned that it has been reported to prosecutors for alleged violations of the Icelandic Waste Management Act.
Eimskip said that it “complied with all laws and regulations in the sale process”.
A number of shipowners have been investigated in connection with demolition sales to South Asia, where regionally-specific scrap metal reutilization and recycling methods allow shipbreakers to pay substantially more per hull.
All the shipowners have insisted that they complied with all the laws and regulations in place in their particular jurisdiction when the sale process was undertaken.
Local operating methods at Alang entail a comparatively high risk for fatalities, injuries and uncontrolled release of pollutants, claims NGO Shipbreaking Platform.
Before reaching the Indian beach of Alang, via Suez, one vessel stopped for a short while in Rotterdam and the other stopped in Athens. At the time of the export of the ships, NGO Shipbreaking Platform formally requested Icelandic, Dutch and Greek authorities to hold all the parties involved in the sale accountable for breaching EU waste legislation.
NGO Shipbreaking Platform has noted that, of 674 ocean-going commercial ships and offshore units that were sold to the scrapyards in 2019, 469 large tankers, bulkers, floating platforms, cargo- and passenger ships were broken down on only three beaches in Bangladesh, India and Pakistan, amounting to near 90% of the gross tonnage dismantled globally.