Dubai-based ship recycler GMS has received approval from the U.S. government to dismantle four container ships previously subject to Iran-related sanctions, according to the company’s CEO. The move could create a pathway for Washington to reduce the number of sanctioned vessels operating in the so-called shadow fleet.
These ships, many of which sail without known insurance or compliance with environmental and safety standards, have helped countries such as Iran and Russia evade sanctions while increasing the risk of oil spills and fuel leaks along major shipping routes.
A formal process for recycling sanctioned vessels could encourage their removal from service, helping curb environmental risks and limit the movement of sanctioned crude and goods.
GMS, which acquires aging vessels and sends them to regulated recycling yards, particularly in Asia, has been in talks with U.S. authorities for months about handling sanctioned ships, founder and CEO Anil Sharma told Reuters.
“These are ships that are moving from a rule-based regime to a non-rule-based regime, which is creating a major problem for everyone while they continue trading,” Sharma said.
After securing permits from the U.S. Treasury, GMS purchased the four ships from an unnamed seller that it said was not under sanctions. The deal marks the company’s first such transaction involving private sellers.
In a previous case in 2019, GMS—incorporated in the United States—acquired a North Korean-flagged bulk carrier for recycling after it had been sold at a U.S. government public auction.
Ordinarily, sanctions prevent companies like GMS from dealing with such vessels. Instead, these ships often continue operating through shell companies, frequent renaming, and opaque ownership structures designed to hide their identities.
Sharma said U.S. authorities were unwilling to grant broad “blanket licenses” and instead required visibility into financial flows and detailed reporting to ensure no proceeds reached sanctioned parties.
U.S. Treasury officials did not immediately respond to requests for comment.
Depending on the vessel type and weight, the scrap value of ships like these can run into the tens of millions of dollars.
According to GMS, the four container ships now have crews and insurance in place and are expected to sail to India for recycling.
Sharma added that GMS is also interested in acquiring sanctioned oil tankers for recycling, though he said that market would likely become viable only after the end of the U.S.-Israeli conflict with Iran.
That conflict has left hundreds of ships stranded in the Gulf region, and Sharma said it remains unclear how many Iranian-linked commercial vessels may have been damaged in U.S. and Israeli strikes.
“The tanker market is so strong right now that most owners still have little incentive to recycle,” he said.