Sustainability

Bahrain signs ship recycling deal with Maersk

July 15, 2024, 7:47 AM

The Chittagong ship-breaking yard in Bangladesh. The industry is estimated to provide at least 50% of the country's steel

‘Incredibly important’ agreement
Circular economy for ship recycling
Business for three sectors

Bahrain has signed an agreement with Danish shipping and logistics company A.P. Møller-Mærsk to create a ship recycling plant in the country.

Maersk – the parent company of APM Terminals Bahrain and operator of Khalifa Bin Salman Port (KBSP) – will supply old vessels to the Arab Shipbuilding and Repair Yard Company, which will dismantle them in its dry dock.

The agreement was signed by Bahrain’s Ministry of Transportation and Telecommunications and Ministry of Industry and Commerce.

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The off-taker of the scrap steel will be SULB Bahrain, a specialised producer of structural steel and partner company of Bahrain Steel. Logistics will be provided by KBSP.

“This will be the first that I know of, where you have a circular economy that is developed through responsible ship recycling,” KBSP managing director Matthew Luckhurst told AGBI.

Costs surrounding the development were not revealed.

About 90 percent of the world’s ship recycling activity – commonly known as ship-breaking – takes place in Bangladesh, China, India, Pakistan and Turkey.

The shipping industry accounts for 3 percent of all global greenhouse emissions.

“There are very few places in the world that have the luxury that Bahrain has where you have a dry dock adjacent to a steel mill within very close proximity to a port facility,” said Luckhurst.

Tanker recycling volumes by gross tonnage declined by 81 percent in 2023 while the sale of bulk carriers for scrap more than doubled, according to Lloyd’s List Intelligence data.

“I think it’s incredibly important,” said Luckhurst. “It provides long-term volume generation and business for three major sectors: the dry dock, the steel mill and the supply chain.

The Baltic and International Maritime Council reports that 15,000 ships, accounting for 12.5 percent of the global fleet, are projected to be recycled in the next decade, doubling the number of ships recycled in the previous 10 years.