The Exxon Valdez's Eco-Friendly Afterlifeby
At some point before the weekend, the ship once known as the Exxon Valdez will come to its final resting place on an oil-stained beach in Alang, India, where it’ll be recycled in the world’s largest and most notorious shipbreaking yard.
Environmentalists inside and outside of India are outraged. The Valdez -- now renamed (I am not making this up) the Oriental Nicety -- like almost all ships scrapped in India, is filled with hazardous substances including asbestos and PCB-laden oils. Under Indian law and international treaties to which India is party, that should render it illegal to import. And yet, not only is it being imported, it’s one of hundreds of ships that are brought into Alang every year for recycling. Despite an order from the Indian Supreme Court on this week requiring that the Valdez be the last such ship imported into India, nobody -- except, perhaps, anti-shipbreaking activists outside of India -- believes that’s going to happen.
The reason is simple: India’s growing economy requires growing volumes of steel, and shipbreaking is one of the easiest, cheapest and arguably greenest means of getting it. Depending on economic conditions, shipbreaking supplies India with 8 percent of its annual steel supply. It has become such a key part of India’s steel industry that India’s steel prices are known to move on the basis of just how many ships are being dismantled on Alang’s beaches. Environmental crackdowns drive the price up; a slow shipping season usually means bankrupt shipping companies, more ships to break, and falling prices.
The Oriental Nicety, which spilled millions of gallons of oil into Alaskan waters in 1989, is the kind of ship that Alang loves. It’s big, with large empty spaces in which laborers can work, cutting it apart. The Indian press reports that the ship was purchased for US$16 million (a rumor very much in line with current market prices), with the purchaser assuming, via industry standard, that at least 70 percent of the 200,000-plus metric tons of ship would be steel. By those numbers, a rough back of the envelope calculation suggests a purchase price of around US$115 per ton.
In Alang, that steel is liberated by teams of low-cost laborers who work day and night with torches, winches and ropes to pull large pieces of steel to the beach below. There, they’ll be reduced to arm-sized pieces and sold to so-called “re-rolling” mills where they’re heated and literally rolled into the steel rods and bars used for re-enforcing structures ranging from buildings to bridges to roads. It’s a highly efficient process: by Christmas, most of the former Valdez’s hull should be helping to hold up buildings in India’s booming Gujarat state. It’s also highly profitable: According to two Alang traders with whom I spoke today, the current price of re-rolled steel is around US$400 per ton.
The environmental community likes to avoid the term “recycling” when it talks about places like Alang. But that doesn’t mean there aren’t very strong green arguments in favor of them. Of these, the most compelling has to do with energy savings. On average, the manufacture of recycled steel requires 74 percent less energy than the manufacture of new steel from virgin ores dug from mines. Because re-rolled steel doesn’t need to be remelted in a furnace, the energy savings are even more significant (though no figures or studies support that suggestion). For India, such savings means that an already overtaxed power grid can be devoted to providing electricity to poor people rather than steel mills, and valuable open space can be conserved rather than dug up for new iron-ore mines.
(Adam Minter, the Shanghai correspondent for the World View blog, is writing a book on the global recycling industry. The opinions expressed are his own.)
To contact the author of this blog post: Adam Minter at ShanghaiScrap@gmail.com.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Adam Minter at email@example.com