A COMPANY'S hopes of dismantling redundant US navy ships at its North-East yard have been dealt another blow.

But the boss of Teesside company Able UK last night said he still hoped staff could start work on the controversial contract within four months.

Hartlepool Borough Council yesterday ruled that planning permission granted to the company in 1997 to build a dam to create a dry dock was now invalid.

The decision comes after a High Court judge decided consent to dismantle marine structures at the yard did not cover ships and that a waste management licence that had been granted by the Environment Agency was legally flawed.

Yesterday's announcement was the third setback to affect the company since news of its agreement to recycle 13 vessels from the so-called Ghost Fleet was released.

Able UK will now have to reapply for all three permissions, as well as four new licences, but managing director Peter Stephenson last night told of his unswerving determination to carry out the work.

Mr Stephenson said that he was optimistic his company would be in a position to begin work in the spring on the four vessels, which campaigners said posed a risk because of the asbestos and PCB chemicals on board.

The council's planning committee discussed the issue behind closed doors yesterday, because of what officials called sensitive legal matters.

After the meeting, the chairman of the committee, Councillor Bill Iseley, said: "There is currently no planning permission in place for the construction of a bund or a coffer dam to create a dry dock.

"The council is now inviting Able UK to submit an application for planning permission in respect of the proposed construction of a bund and any associated works to create a dry dock.

"We would expect this to include a full environmental impact study."

An environmental impact assessment is also needed to accompany Able UK's fresh bid for a waste management licence, which may be granted by the Environment Agency only if there is a dry dock in place.

* Read more about the ghost ships and tell us what you think at www.ghostships.co.uk