Greendock=

sustainable shipdismantling

=solving a world problem

Doebren Mulder Chairman of the BoardKuala Lumpur 12-07-2012

Present Situation

The hazardous working environment and pollution in traditional “Beaching”

Impact of Beaching• Social

• Lack of safety standerds for workers• Less than minimum wages• Use of child labor ( 15%)• No work no pay, no health insurrence• No right to join a trade union• Last year >800 workers killed by accidents• >12000 workers seriously injured

• Environmental

• Contamination of the coastal soil and seawater by chemicals and waste• No agriculture • No fishing industry• No fueture for this areas for living• (source: YPSA)

• $/€ Earning model

• Ship owners• Ship breakers• Cash buyers• Steel manufacturies

Please can we change this world problem?

Trends in steel

• Global steel demand to hit new records in 2010 and 2011

• New records to be set in China and India; steady recovery in other emerging markets

• Global steel consumption to rise by 13% (2010) and by 5% in 2011 (to 1.340Mt)

• Scarcity of resources

• Backwards integration is part of sourcing strategy; maybe in partnership with suppliers

• Global scrap market expected to remain tight

• Large increase in scrap price last few years; year average around $ 400/ton

Global Scrap Market

• Scrap market expected to remain tight

• Total metallic market 1,8 billion ton (year 2015) ; 30% will come from scrap

• Shortage in SE Asia; China and India important players (>70%)

• Ship Breaking is one of the sources for scrap supply

• Feedstock of ships is enormous

• Annual supply of > 300 ships (Panamax, Handymax and Handysize vessels) for recycling.

• Number wil increase (expanding Panama Locks and new design for shipbuilding)

• Ban on single hull tankers (European fleet of 1.300 single hull tankers to be phased out)

• Beaching forbidden since 2008 (UN directive)

• Today 75% of ship dismantling via beaching in SE Asia

• Dangerous (death’s) and major pollution risks (asbestos and oil)

Present situation waste

• Waste asbestos is typically disposed of in landfills

• Methods for permanent destruction are becoming more attractive as final solution

• Legislation/regulation getting more and more restrictive

• CSR leading to demand for ‘green’ solutions (change shipbreaking practices)

• Greendock’s Solution:

• Thermochemical Conversion Technology (via GD-partner ARI technologies)

ü Permanent conversion of asbestos to non-hazardous inert material

ü Eliminates potential future liability issues with landfill disposal

ü Significant volume reduction

Regulation/Legislation

• There is a significant amount of legisation govering ship breaking globally.

• A new International Convention for the Safe and Environmentally Sound Recycling of Ships will come into force by 2015.

• Leading multinational companies implementing sustainable and CSR policies.

• Beaching ( will be ) banned by enforcing legislation and regulated by the Internation Maritime Organisation ( IMO ) worldwide.

Methods of ship dismantling

•Beaching (forbidden by Unesco)

• Demolition on beaches primarily in India, Bangladesh ,Pakistan without precleaning

• Causes serious environmental (asbestos and oil pollution) and personal damage (death’s)

• In Bangladesh: 2 ships per year per “yard” with revenues around $ 2 mio per year

•Horizontal breaking (not in compliance)

• Takes place along a reinforced quay wall with harbor cranes (China, Turkey)• Low efficiency with 2 ships per year per yard• Not in compliance with zero pollution due to open maritime environment of

dismantling

• Ship lift facility

• Used for ship repair, normally for smaller ships; costly transfer system

• Greendock facility

• Special designed for shipdismantling• Per GD-yard 360.000 ton scrap annually (24 Panamax ships/year of 15.000 LWT

each)• Environmental friendly (zero pollution) and safe production facility• Serious investment (USD 50 mio) ; turnover USD 65 mio/yr at operational costs

USD 38 mio/yr• IRR around 31% (depending on scenario: ranging from best case 52% to worst

case 19%

Methods of shipdismantling

Solution: the Greendock Concept

• Safe

• Sustainable

ü Society ü Environment

• Sound Investment

• In full Compliance

• Efficient

• Profitable

• People, Planet, Profit

Greendock operation

Phased ship pre-cleaning and dismantling in a Greendock facility

Greendock dismantling facility

Phased ship pre-cleaning and dismantling in a Greendock facility

Greendock Ship Dismantling & Recycling Facility

• The concept is based on:

• A ‘foil Dock’ (patented design) of 420 m * 100m• In a sealed area on a scale to accommodate large sea going vessels up to

Panamax size (15.000 LWT)

• Phased dismantling

• Pre-cleaning: environmentally friendly (in accordance with removing all materials / objects not belonging to the vessels construction including waste)

• Slicing the vessels body into sections (14 sections of 20m of 1.500 ton) in the foil dock

• Landside cutting stations with supports for maximum 1.500t per place; demolition of sections into (various qualities of) scrap at cutting stations

• Design and detailed drawings quay wall for disposal of scrap

• Transfer of scrap to steel plant

• Focused on achieving the highest known possible level and uses the Zero-pollution standard ISO/PAS 30000

Certificated process

Location of dismantling facility

Critical succes factors:

• Logistics

• Crucial aspects are shipping routes and distance to Market• Note: Opex Panamax ship $ 25.000/day

• Site selection

• Access to open sea; sufficient area available (around 300.000 m2) and good access to roads

• Docksize: 420m*100m ; minimum approaching water depth 6m

• Labour cost

• Convesion price = pre cleaning and dismantling costs (set at market average $180/ton)

• Note: With some 600 workers per unit (one-shift operation), labour cost is crucial factor

Zero Polution working methods

Critical success factors:

•Pre-cleaning process• ‘In survey’ is part of selection process before vessel is brought to Greendock

facility• ‘In survey’ report in compliance with all international regulations

• If radio-active levels are above international minimum levels as set by authorities, the vessel will be rejected for Greendock-dismantling process and will not entre the country of Malaysia

•Asbestos• Partners of Greendock (Premier Oilfield Services CO Ltd / ARI Technologies)

possess lincenses to operate and thus are certified to work/deal with asbestos (BS EN ISO 9001)

• Track record: U.S Army Corps / AJA Registrars /Chevron Offshore (Thailand) Ltd

• Greendock partners guarantee to operate within internationally agreed upon limits during asbestos removal during the ‘ARI Technologies Incinerator’process

• All personnel involved will be trained to operate

Investment & financial planning

• Pre phase: study, surveys, permits, land, design

• Site construction, equipment, buildings, project management

• Business case financials• Total Investment costs (including land plot and working capital): USD 50 mio

(max)

• Annual production: 360.000 ton scrap per year

• Operational costs: USD 38 mio per year

• Operational revenu : USD 65 mio per year

• Resulting in a IRR of around 31% (base scenario)

Note: depending on a local economics and scenario in place IRR will vary from 52% (best case scenario) 19% (worst case scenario)

Financials (ratio’s / scenario’s)

• Detailed breakdown of costs (Bill of Quantities) will be part of the BP/FS

• Design/project management ; pre construction ; Construction

• A Financial model for 10 years

• Input of the BOQ and a number of assumptions

• Total investment / working capital / land cost (all included)

• One Panamax ship is assumed to weight 15.000 LWT ; year production 360.000 ton scrap

• All service price of Greendock services $ 200/180/160 per ton scrap

• Capacity and utilization of the facility: 24/22/20 vessels/yr (first year of operation:50%)

• Corporate taks : 35% and 0% (potential taks exemption)

• Estimation of staff costs

• Margin for miscellaneous extra cost

Output ratio’s: IRR form 52% (best case scenario to 19% (worst case scenario)

Greendock in Malaysia

• Worldwide Statement• Malaysia solves a world problem

• A ‘Green label’solution for Beaching of vessels; putting Malaysia further on the map

• Zero pollution’ solution for a global problem

• Employment for thousand of workers

• Per yard: in a one-shift operation some 600 workers and 100 staff

• Potentially upscaling to ‘24/7’operation with higher employment and profit numbers

• Logistic centre

• Malaysia has central position in the Asian Area with international orientation

• Major impact for (harbour) activities in the region (plus non-ferrous spin of)

• Malaysian international mindset and good infrastructure Malaysia

Next steps

• Feasibility study/Business Case

• Site Visits & pre selection

• Investigate shipping routes and logistics (freight price) to SE Asia / Europe

• Investigation / inventory of permits

• Investment costs and financial engineering

• Preferred business model (as a presented or with a business partner

• Time frame for FS/BC (3 to 4 Months)

Greendock thank’s you for your time to attend and to help this initiative in Malaysia for getting a sunstainable shipdismantling industry and solve this global problem