Inside the risky, lucrative business of Canada’s dead ships: Big money, rough seas, old steel and millions of dollars in cleanup

Untethered, the Miner floated to Nova Scotia, crashing onto the shores of Scatarie Island, a pristine environmental area protected by the province.

Inside the dead ship was 38,000 kilograms of asbestos and another 26,000 litres of fuel, hazardous waste that a provincial official said would have permanently damaged the fragile coastline. It would take four years and nearly $20 million of provincial money to remove the wreckage.

In the years following the 2011 grounding of the Miner, the federal government said the towing of dead ships needed heightened oversight.

Yet Transport Canada continues to routinely approve risky oversea tows of retired laker or coastal ships that are not built to withstand the ferocity of open seas.

Federal laws forbid the abandonment of retired vessels but Canada lets domestic shipping companies make their own end-of-life decisions. And those companies usually sell dead vessels to overseas buyers who tow them to Turkish scrapyards. While standards have improved in those yards, there have been recent worker deaths, and the recycling method, some experts say, could be improved.

Odds are so good that rough seas will tear apart lighter vessels and leak oil, asbestos and heavy metals into the water that many Canadian insurers won’t underwrite the tow of dead ships, industry experts say.

Hauling rickety ships through ocean conditions they’re not designed to withstand is not just environmentally dangerous, critics say. It’s also killing Canada’s ship-breaking jobs and removing valuable steel from local mills.

Still, shipping magnates send retired vessels to Turkish shipyards, a decision apparently steered by one goal: a bigger payout.

With lower wages at foreign scrapyards, the international owners who buy the ship to get it overseas are able to offer hundreds of thousands of dollars more than Canadian competitors for vessels, which are stripped for steel.

Two of Canada’s largest ship companies — one run by the sons of a former prime minister, the other by one of the country’s wealthiest families — have sold roughly 20 vessels overseas since 2012, according to an NGO that tracks these transactions. Some were lakers or coastal ships.

The companies said their vessels go to yards in Aliaga, Turkey that have been accredited by European Union Ship Recycling Regulations. But NGO records show the dead ships have been sent to Turkey for nearly a decade — years before the first yards were accredited in late 2018.

Transport Canada has a checklist of rules for overseas tows but said it also has no idea where Canada’s retired vessels end up because once in international waters, the new owner can change its destination.

At the Port of Montreal, overseas buyers often put another country’s flag on the mast, including “flags of convenience” from nations known for lax enforcement of international maritime rules.

And the final voyage of a Canadian vessel like the Sir Robert Bond passenger ferry from Labrador can end on a beach in India, Bangladesh or Pakistan, where workers toil in dangerous conditions and the tide carries the ship’s toxins into the sea.

“If you are going to send an egg to Peterborough from Toronto, you don’t put it in the back of a truck,” said David St. Martin, vice-president of the marine and logistics practice at Canadian insurer Strategic Underwriting Managers.

Like the Miner, other ships have been sunk or cast adrift during their ill-fated oversea tows from Canada.

In 2009, the Algoport — a laker owned by Canadian company Algoma Central — was mid-tow to China for repairs when it encountered heavy seas and split in half. The tugboat crew filmed the Algoport, bottoms-up, sinking below the waves.

Even robust ships are vulnerable when towed in harsh conditions. In January 2013, the Lyubov Orlova, a retired cruise ship owned by a Torontonian and named after a Soviet-era actress, lost its tow line in gale-force winds while en route to a Dominican scrapyard. As it floated toward Newfoundland’s offshore oil platforms, Transport Canada had a new tug do an emergency tow but the line snapped and the Lyubov Orlova drifted toward Ireland. Its emergency beacon stopped beaming and the ship disappeared, presumably underwater.

There is simply too much risk in towing lightweight lakers and coastal ships overseas, according to two Canadian marine experts, who say the vessels should instead be recycled in Canada where they can be scrapped without the risk of sinking.

Bud Fraser, a marine surveyor, and Kevin Yik, a marine designer, both said the ships are vulnerable to sinking when slammed by the powerful, longer waves of the ocean, especially during a storm.

In a report calling for stricter towing rules, submitted to Transport Canada by a domestic ship recycler, Yik said, “Great Lakes Bulk carriers” are sensitive to wind and their design “would cause the vessel to become (directionally) unstable and sometimes uncontrollable.”

Ships designed for lakes, Yik wrote, “should not ever be sailed or towed on the ocean, regardless of age and physical fitness. The risks are simply unquantifiable and therefore uninsurable.”

St. Martin, the marine insurer, called the ocean tows of lakers or coastal ships a “loser” proposition.

“When you are dealing with a dead tow of an end-of-life coastal or laker class vessel across an ocean, the risk of loss is very high and any loss is almost certain to be a total loss,” St. Martin said in an interview. “I am unaware of any underwriters in Canada who would knowingly insure this risk.”

Transport Canada requires the dead ships be insured before they’re towed overseas.

The threat of an old laker or coastal vessel sinking doesn’t sway Canada Steamship Lines (CSL), run by the sons of former Prime Minister Paul Martin, or Algoma Central Corp., part of the Jackman family empire of shipping, investment and insurance companies. The most public Jackman is Henry N.R. (Hal), Ontario’s former lieutenant-governor who, with a trust created by his father 50 years ago, controls the companies, according to 2020 company filings.

For at least a decade, Algoma and CSL have sold retired vessels to overseas bidders, who then send the ships to Turkey, for its thriving steel industry.

CSL’s dead-ship tows are scrutinized by Transport Canada before departure and the recycling is overseen by an independent organization with “stop-work authority” that provides weekly “progress reports that include findings from audits and follow-up actions taken by the yards,” said spokesperson Brigitte Hébert.

Algoma Central Corporation said its lakers and coastal ships are capable of ocean transit.

“These voyages are completed during the summer to avoid transiting the North Atlantic in the fall or winter seasons,” said Peter Winkley, Algoma’s chief financial officer. All tows are “fully insured by the buyer” with certification provided before the title to the ship is released, he said.

CSL and Algoma say their vessels are properly recycled in Turkey, meeting green standards and are not shipped to unapproved locations.

“CSL recognizes the environmental and safety risks posed by ship dismantling and is committed to recycling ships that have come to the end of their useful life according to the highest standards,” spokesperson Hébert said. “CSL’s vessels are recycled in accordance with our stringent ship recycling policy that exceeds global regulatory requirements.”

Algoma’s Winkley said, “Any implication that yards in Turkey are substandard is without basis.” He said Algoma is committed to “ensuring that our ships are recycled only at responsible recycling facilities where the dismantling...will not pose any unnecessary risks to human health, safety or the environment.”

Both companies said their ships are sent to European Union-accredited yards, but did not provide the names of those sites when asked.

Eight of 27 Turkish yards have been accredited since November 2018, facing regular inspections, said Nicola Mulinaris from the NGO Shipbreaking Platform, an international coalition of groups working to stop dangerous ship recycling.

Mulinaris said those accredited shipyards must do more to educate workers about accident prevention, occupational diseases and proper handling of waste like asbestos.

In February, a steel block struck and killed a worker who was torch-cutting in the Simsekler yard, according to news reports. Last October, a man was killed when he was hit by metal during the dismantling of a rig in the Isiksan yard.

Before the Miner was towed away on its trek that would end shipwrecked in the shallow waters off Cape Breton, Transport Canada granted the vessel’s Turkish owner a “green passport.” The ship, according to that federally issued permit, contained only 6,000 kg of asbestos and had no remaining fuel. It posed minimal risk to the environment.

As Nova Scotian authorities grappled with the wreck’s clean up, they learned that wasn’t true at all.

More than 38,000 kg of material containing asbestos was removed from the wreckage, along with more than 26,000 litres of fuel — of which 800 litres leaked to other parts of the ship with some escaping and leaving a sheen on the water.

The ship’s owner disappeared, leaving the province to foot the $20-million bill to dismantle and remove the wreckage.

The shipwreck led to new Transport Canada rules — a checklist helping inspectors assess dead ships’ overseas tows.

In 2015, Transport Canada issued a bulletin saying “recent dead ship towing operations resulting in the loss of the tow have illustrated the need for additional oversight.”

It cited a new policy to assess tows before ships leave Canada and highlighted guidelines published by the International Maritime Organization, although the IMO told the Star its ocean-tow recommendations are “minimum” standards.

But little has changed to make overseas towing of unfit vessels any safer, industry observers say.

Transport Canada — which has the power to decide whether a vessel built for quieter waters is fit for oceanic journeys — still does little to regulate the industry, saying tows are a “commercial decision.”

Before approving a ship’s departure, the Canadian government assesses each dead-tow using a lengthy checklist that requires “no waste oil or hazardous waste on board.”

However, older vessels have toxic materials — asbestos, mercury and polychlorinated biphenyls — embedded in their structure, according to the Brussels-based NGO Shipbreaking Platform. Oil is supposed to be pumped out of cavernous holding tanks before the tow, but some is left behind.

In October 2020, hurricane season, dead-ship Sal, a 40-year-old coastal vessel, was dragged from the Port of Montreal into the roiling waters of the North Atlantic.

The boat, in mariner’s parlance, was “wasted,” its hull rusted by the salt it used to haul from the Magdalen Islands up the St. Lawrence River, a Canadian ship recycler wrote to Transport Canada.

The recycler, Jordan Elliott, warned the lightweight coastal ship, its hull vulnerable, should not cross the ocean. But by the time the regulator replied, dead-ship Sal was headed across the Atlantic.

Sal arrived at a Turkish scrapyard after 39 days at sea. No Canadian dead ships have sunk since 2013, but members of the industry say that can only be attributed to luck.

“It’s Russian roulette,” said Elliott.

Some ships have fan clubs. They’re made up of self-declared “freighter freaks” who drive for hours to watch a passing vessel and post about it on boatnerd.com — a site that garnered 10.5 million hits between March 2020 and January 2021.

“You see a ship coming by — it’s like a little moving city,” said Roger LeLievre, who manages the website. “Where is it coming from? Where is it going? What is it carrying? What is its history?”

Some come to catch a glimpse of ships at the intersection of Lake Erie and the Welland Canal, where the Elliott family’s Marine Recycling yard is a familiar landmark.

While business has dwindled, some ships still end their lives at Elliott’s main base in Port Colborne. As far as recycling facilities go, this one is tidy. It has separate piles for propellers, boilers and scrap metal. Nearby are heavy chains used by the hydraulic winch to pull vessels out of the lake, with each steel link weighing 85 pounds, as heavy as a prize-winning watermelon.

When the retired ships arrive, they dock in the canal, where they’re met by trucks with hoses that remove fuel and hazardous wastes, including hydrocarbons like oil. The tanks are washed to avoid the risk of fire.

Later, specialized hydraulic-chain pullers winch the ship out of the water, aided by massive pneumatic airbags that roll it onto the land where it is broken apart, far from the shoreline.

The NGO’s Mulinaris said Turkey uses partial land recycling with much of the ship sitting in the water while the section on land is dismantled. Turkey’s approach, he said, is better than the environmentally destructive beach recycling in South Asia that allows the ocean tides to swamp the ships, carrying oil, asbestos or heavy metals into the ocean.

In Port Colborne, the Paul H. Townsend, a retired laker, sits on land, awaiting the blow torches that will take it apart. Stripping a ship is dangerous work. Marine Recycling’s staff wear full hazmat gear and undergo blood tests every three months to check for cadmium, lead and other heavy metals, released in fumes from the blow torches. Specially trained staff earn between $50,000 to $100,000 a year.

In early May, the wind off the lake is freezing and Wayne Elliott sits in his white Silverado truck, window rolled down.

“I don’t like exporting jobs,” Wayne said, inhaling a DuMaurier Light. “Who benefits? I just don’t understand it. Canada is the loser, too. They lose all those jobs and the natural resources — the steel.

“It’s kind of contrary (to recycle overseas.) The companies are very environmentally astute here in Canada as far as their garbage and recycling goes.”

Wayne has been a shipbreaker for 50 years. He followed his father into the business, and now his son, Jordan, runs the company. They have recycling yards in Sydney, Nova Scotia and along the Fraser River in B.C. Wayne said Marine Recycling will go bankrupt if overseas towing continues.

Canada doesn’t have specific ship recycling regulations, but Marine Recycling follows rules from a dozen provincial and federal laws, including the Occupational Health and Safety Act and the Canadian Environmental Protection Act.

Wayne said the overseas buyers pay shipping companies roughly $850,000 to $1 million and sometimes much more for a decommissioned vessel, depending on the amount of steel on the ship and its value on the commodity market.

Turkey’s hunger for old steel coincides with its growth into one of the world’s largest steel producers, competing against Canada. A resource that can be reused to make new steel, used steel is sold on the commodities market.

In 2017, Turkey’s steel exports to America jumped 238 per cent while Canada’s increased by five per cent, according to the U.S. Department of Commerce.

Usman Valiante, an environmental policy analyst, said Canada produces some of the cleanest steel in the word with greenhouse gas emissions 30 per cent lower than those from Turkish steel.

“Every time we burn fossil fuels to tow our recyclable ships to Turkey, we ship off Canada’s competitive advantage in recycling-based steelmaking, all to make ship owners a few more dollars on a scrap sale,” Valiante said.

Catherine Cobden, president and CEO of the Canadian Steel Producers Association, said Turkey is overproducing steel, harming Canada’s industry.

“It does not make sense, on principle,” Cobden said, “to send Canadian ships to Turkey to be recycled into products that are dumped into the Canadian market, undermine investments and erode green efforts of the Canadian steel producers.”

The Elliotts have sent Transport Canada numerous emails and reports detailing the negative impact of overseas ship recycling on jobs, the loss of natural resources and the environment.

In December, Wayne said he paid close to $1 million to Algoma Central Corp., for the Algoma Enterprise, “just to stay in the market so we didn’t go out of business on the Great Lakes.

When new owners buy a retired Canadian ship, they often register it to a new country before towing it away.

Dead-ship Sal, a coastal ship owned by CSL, was put under the flag of St. Kitts and Nevis. Algoma recycles some ships in Canada but also sells to buyers that sometimes fly the colours of Sierra Leone — a fact that came as a surprise to some within Transport Canada.

Banners from these countries are called “flags of convenience.” An updated list of flags is published under the “Paris Memorandum of Understanding on Port State Control,” an agreement of 27 countries — including Canada. It seeks to “eliminate the operation of substandard ships” through international standards meant to protect the environment and crew.

Mulinaris, of NGO Shipbreaking Platform, said countries with low-performing flags offer cheap registration for “last voyages” and a relaxed approach to international maritime rules, including those meant to limit shipwrecks that pollute. The flags on ships originating in Canada are not related to recycling.

According to emails between a federal bureaucrat and a marine industry observer, the bureaucrat said that colleagues were shocked to learn of the ‘flagging out’ practice.

“That was first taken with some doubt,” the government official wrote, “but then the person that is leading this effort, looked up the list of vessels that have been recycled lately and found out that the vessels that have flown the Canadian flag, have flown the flag of Sierra Leone (wow, really?) when it went over to the ship recycling place in Turkey.”

Canada’s shipping companies say their use of overseas recycling is done with environmental stewardship in mind, following rules known as the Hong Kong Convention.

But the as-yet-unratified convention, cited by Canada’s shipping companies as the go-to-standard for green recycling, is actually quite weak, Mulinaris said.

It allows the widely-condemned practice of beach recycling in South Asia, he said, where dozens of workers are injured or killed in accidents every year.

In 2019, the Sir Robert Bond, a Labrador passenger ferry named after the first prime minister of the Dominion of Newfoundland, was towed to Alang, India for beach recycling.

Transport Canada approved its departure.

In its final years, the ferry went through several owners before an east-coast peat moss company sold it through a broker. It was later registered under the flag of Comoros, an archipelago off Africa’s east coast. Comoros is a “high-risk” flag, according to the Paris MOU.

In 2019, NGO Shipbreaking Platform sent an email to Environment Canada warning that the new owner planned to send the Bond to Alang, India, in contravention of the Basel Convention. That convention forbids sending hazardous waste from countries that are signatories — like Canada — to countries where it is unlikely to be properly managed, Mulinaris said.

The NGO later called the Bond’s arrival in India an example of the “Canadian government’s lack of action” on proper ship recycling.

Transport Canada said it doesn’t control the ship’s final location because once in international waters, the “master in charge of the towing operation can change its final destination regardless of the original destination.”

While there’s no sign Transport Canada will take control away from shipping magnates, emails reviewed by the Star suggest one bureaucrat believes the lives of old vessels should end at home.

“But senior management seem to think that towing a ‘Laker’ is the same as towing any other ship,” the official wrote, “and that it is up to the industry to take care of this issue.”

Data Analysis by Andrew Bailey, a freelance data analyst for the Star