Infrastructure for ship dismantling and grounded vessels
Infrastructure for ship dismantling and grounded vessels
Business Model Description
Build port infrastructure for ship dismantling and grounded vessels.
Expected Impact
Under a friendly dock, Greendock will build a profitable technological dock at lower cost, efficient work methods, safety and with zero contamination
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Panama: Western Region
- Panama: Central Region
Sector Classification
Infrastructure
For the last few years, investment in infrastructure in LAC has decreased, being 2% on average of its GDP vs. 6% in countries like China. Investment in infrastructure contributes to economic growth, encouraging private investment, expanding markets due to the effect of economies of scale that is generated.
Policy priority
It is extremely important that governments keep investment in infrastructure within their policy priorities, as well as new regulations that encourage foreign investment as a pillar of sustainable development.
Infrastructure
Panama has a large infrastructure gap, which presents an investment opportunity based on strengthening capacities to consolidate itself as a commercial logistics center for the world and the region. Investment in infrastructure is of great importance for economic growth, since it contributes to private investment, broadens markets, and reduces production costs.
Policy priority
For private investment in infrastructure to take place, the government must promote them with tax incentives, import exemptions. Concessions, grace periods for project maturation among other actions.
Engineering and Construction Services
Pipeline Opportunity
Infrastructure for ship dismantling and grounded vessels
Build port infrastructure for ship dismantling and grounded vessels.
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
The current fleet of ships is aging and it is necessary to dismantle 600 to 800 ships per year.
After the World Industrial boom of the '90s, the shipbreaking industry increased due to the need for ships with greater capacity and technology.
The expansion of the Panama Canal has caused a need to take advantage of more draft for new vessels, thus accelerating the rate of more ships in disuse.
Indicative Return
20% - 25%
Transit point for the largest merchant fleet in the world, unique project in the region, European certifications, Free Trade Agreements in force, tax benefits, pre-negotiated contracts, increase in the price of steel and the long experience of its promoters.
Investment Timeframe
Medium Term (5–10 years)
According to investors, the average adequate time is from 5 years to 10 years for the project to start generating profitability given the size of the project.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
Currently there is a long list of more than eight (8) thousand ships to be recycled, which is having a very negative impact on the environment and specifically the oceans, given that they are in disuse and on sticks in ports or on beaches affecting even marine life.
In 2020, Panama's greenhouse gases were emitted for more than 3 thousand megatons of CO2 into the environment.
To obtain 200,000 tons of ferrous material, the iron mining industry must process one (1) million tons of earth, using too much water and consuming three times more energy than that used in the steel ship scrapping industry.
Gender & Marginalisation
In Panama, unemployment is generally around 10%, however in remote or marginalized areas it is much higher due to geographic issues or places suppressed by previously instituted exhausted models.
More than 80% of the industry dedicated to shipbreaking do not have the minimum working conditions and are exposed to very high risks: contamination with chemical products, explosions, long working hours and fatal accidents due to the non-use of adequate equipment.
Expected Development Outcome
The Greendock scrapping project will directly contribute to the cleanup of the oceans through its sense of extracting scrap from the environment and subsequent recycling.
Greendock will use clean energy for its operation with its own facilities through solar panels for all the use of its machinery.
The shipbreaking industry and its recycling of steel gives a great breather or alleviates the demand for minerals for its conformation (iron/coal), so we can conclude that it contributes to the non-impact of the environment due to the effect of greater mining operations.
Gender & Marginalisation
Greendock estimates that to operate the shipbreaking dock it will require directly employing 800 to 1,000 people for its optimal operation and 3,000 jobs indirectly, which will significantly impact these marginalized areas.
The Greendock project contemplates work methods with innovative, safe, sustainable and efficient technology, where its process will be mechanized for the scrapping of boats, thus guaranteeing decent and well-paid work.
Primary SDGs addressed
> 70% of the total number of ships in disuse end up abandoned on the coasts of South Asia for their scrapping in an inappropriate way, representing environmental effects and for the workers because they do not have the appropriate equipment.
Continue to strengthen existing treaties or agreements to oblige the owners of disused vessels to use specialized shipbreaking ports.
8.1.1 Annual growth rate of real GDP per capita
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Outcome Risks
The shipbreaking and freight forwarding industry show negative correlation. Economic growth in the world increase trade and has reverse effects on ship owners using vessels beyond their useful life.
Impact Risks
Less inventory of product ships that their owners give a higher use will directly affect the income projections of investors.
A sudden drop in the global steel price would hurt investors and contract labor given low order volumes with depressed prices.
Impact Classification
What
Projects of this magnitude in rural areas are having a great positive impact on job creation, which translates into people's economic well-being.
Impact Thesis
Under a friendly dock, Greendock will build a profitable technological dock at lower cost, efficient work methods, safety and with zero contamination
Enabling Environment
Policy Environment
Basel Convention of 1992, International Convention for safe recycling of Hong Kong 2009, European Regulation for ship recycling 2013.
Strategic Plan for Maritime and Port Development of Panama with a vision for the year 2040.
Law No. 56 of 2008, General of Ports of Panama.
Financial Environment
Financial incentives: The capitalization scheme to develop this project is exempt from financing under normal market conditions, through the issuance of shares, debts or convertible notes.
Fiscal incentives: Tax exemption by the Government.
Promotion of the ship scrapping project at the level of the Maritime Registry of Panama.
Regulatory Environment
Panama Maritime Authority
Law 19 of 2021 that created the Barú Free Zone.
Marketplace Participants
Private Sector
Project promoters, Investors, Private Financing, people, environment, location.
Government
Government: Panama Maritime Authority
Target Locations
Panama: Western Region
Panama: Central Region
References
- (1) HUB Panama, Strategic Maritime and Port Plan of Panama., 04/2019, https://amp.gob.pa/wp-content/uploads/2019/04/PEDMP2040_RESUMEN-EJECUTIVO_vE20190426-opt.pdf
- (2) Law No. 56 of 2008, General of Ports of Panama.
- (3) IDB, 01/20/2020, https://blogs.iadb.org/agua/es/infralatam-inversion-en-infraestructura-en-america-latina/
- (4) ILO, 2008. https://www.ilo.org/global/about-the-ilo/mission-and-objectives/features/WCMS_100108/lang--es/index.htm
- ("(5) Waste Managers, 01/26/2021, https://sdginvestorplatform.undp.org/market-intelligence. "
- (6) CRITICAL, 03/19/2021, https://www.critica.com.pa/nacional/puerto-armuelles-puede-convertirse-en-centro-de-desguace-de-barcos-600377