New yard pitches for green US demo market

Puerto Rico’s Marine Environmental Remediation Group employs a ‘ship’s waistcoat’ method of scrapping

Marine Environmental Remediation (MER) Group became the seventh professional shiprecycling facility in the US when it opened for business at an abandoned naval base in the Puerto Rican town of Ceiba last year.

It is pitching itself as one of the greenest shiprecycling facilities available anywhere.

Lawrence Kahn, a company founder who acts as its general counsel, and Yogesh Rehani, who joined as chief commercial officer last month after a long career with cash buyer GMS, say their goal is to recycle 100,000 light deadweight tons (ldt) per year.

US shiprecyclers cannot compete with the international demolition markets for large commercial ships. Their overheads are too high.

“Our disadvantages are the costs of facilities, labour, insurance and environmental, health and safety compliance,” Kahn said.

Their bread and butter therefore has been restricted mostly to redundant navy and other government-owned ships that cannot be sold abroad, along with US-owned vessels that are too small to make scrapping elsewhere financially viable.

MER has yet to tap into the seemingly endless source of redundant US government-owned ships but it is hoping to do so soon. It has begun the approval process with the US Maritime Administration (MarAd) and has applied to be on the European Union (EU)’s recycling white list.

With regards to the latter, it has been audited and given a certificate of compliance by Grieg Green, and is now set for a site visit.

Kahn says MER is eagerly awaiting American and European certification, which will allow the facility to ramp up capacity.

He dismisses any suggestion that MER is entering the market too late in the game to tap into the once endless supply of reserve fleet vessels that have steadily been sold off for scrap.

“It is true that most of the reserve fleet ships are gone, but a small number remain. These will have to be recycled in the US,” he said. “However, the US government owns a vast fleet of ships and at some point every year ships get decommissioned and are given to MarAd for disposal, so there will always be a steady supply of tonnage.”

Rehani adds that MER does not intend to rely solely on government-owned tonnage as a supply source. It is also targeting rigs, casualties and smaller vessels, including those in the offshore oil services sector.

So far, the company has recycled a small general cargoship and is working on a couple of pipe-laying vessels and a few deepsea barges. Upcoming units include a rig.

Kahn notes that US recyclers are able to offer only $75 to $100 per ldt for demo-destined ships, but MER is counting on the high delivery costs to India or Turkey to help negate the price difference.

“Our calculations show that for vessels of up to 10,000 ldt, the US has the advantage when it comes to vessels delivered under tow, while India and Turkey have the advantage for vessels delivered under their own power,” Khan said. “Anything under 7,000 ldt is probably not economically viable to send to India under its own power.”

Kahn and Rehani hope that MER will also be able to bring in non-US-flag tonnage to their facility, although they admit that US regulations covering the import of PCBs make this difficult.

“It is something we are working on right now,” Rehani said.

Kahn expects US demand for scrap steel to grow because of the Trump administration’s pledges to rebuild national infrastructure, which should bode well for the country’s shiprecyclers.

MER claims its shiprecycling practices are among the most environmentally sound and meet or exceed all requirements of the US and EU.

Its yard, located at Puerto Rico’s former Roosevelt Roads Naval Station, has been able to adapt and use many of the base’s facilities for green recycling.

MER uses vertical dismantling of ships, employing a “ship’s waistcoat” (a proprietary invention developed by the company), which prevents contaminants from touching the surrounding water.

Vessels are moored alongside a pier originally designed to accommodate two aircraft carriers, and dismantling is performed through the removal of larger intact sections — referred to as modules — while maintaining the ship’s watertight integrity, trim and stability.

The modules are then transported to an indoor cutting facility that captures and filters contaminants to prevent them being released into the air. Inside, the modules are processed to appropriately sized recyclable material. Processed metal and other material is stored under cover to avoid contamination of the environment from stormwater runoff.

When the ship has been reduced to the lower hull area, but is still afloat and capable of being towed, it is either lifted out of the water by crane (in the case of small ships) or towed to the yard’s slipway, where it is hauled out of the water on roller bags for final cleaning and demolition. The slipway is scoured once all the sections of the ship have been removed, removing any potential environmental contamination before receiving the next hull.

Close by is a drydock (also designed to accommodate a large aircraft carrier) that MER eventually hopes to put back into commission to handle larger hulls.

The drydock is on land not leased by MER, but it hopes to do so when it starts to receive suitably sized ships, although this will require a substantial investment.

“When the US Navy handed back the base, locals moved in and stripped it of anything of value,” Kahn said. “We’ll need to completely refurbish the dock and install new pumps. But if we can get a lease, we are willing to invest whatever is needed to put it back in service.”

MER has 220 full-time employees, but this number will increase to more than 700 as its gears up its recycling capacity to its goal of 100,000 ldt per year.