Financial Post – Ottawa eyes the shipbreaking business

(Written by Peter Kuitenbrouwer)

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10 February 2015 –
The government of Canada thinks there may be an opportunity for Canadian companies to get into the business of scrapping and recycling ships that have outweighed their useful life.

Transport Canada last week put out a tender for “an assessment of the current Canadian capacity for small and large vessel recycling.”

Most ships last for a few decades, and when their useful life is over their owners typically sell them to countries that specialize in shipbreaking, such as Bangladesh, China, India, Pakistan and Turkey, the document notes. When they scrap the ships, firms in these countries recover huge quantities of steel.

In Canada, some ships are not even worth towing overseas: dock yards and shore lines across the country are increasingly littered with abandoned, discarded ships, Transport Canada suggests.

“A recent Transport Canada inventory shows 22 abandoned vessels that are over 100 ft in length and made of steel,” says the document, Marine Vessel End-of-Life Cycle Management.

Transport Canada’s efforts to encourage a domestic ship recycling industry come as Canada has largely retreated from the business of building ships. Until recently Canada retained a 25% tariff on the import to Canada of foreign-built ships. The penalty failed to inspire orders for domestic-built ships, however, and in 2010 Canada scrapped the tariff.

In response, recently ship owners in Canada such as Algoma Central Corp., Canada Steamship Lines, Lower Lakes Towing Ltd. and Transports Degagnés Inc. have ordered among them 35 new ships worth $1-billion, to renew the fleet that hauls bulk cargo such as grain, iron ore, rock, gravel, coal and salt through the St. Lawrence Seaway and the Great Lakes.