THE North-East could find itself in pole position when it comes to the scrapping of potentially toxic "ghost ships" from across the UK and Europe, it emerged last night.

A Government study suggests Teesside and Tyneside as amongst the best possible locations for a permanent centre to scrap obsolete vessels, which can contain dangerous substances such as lead and asbestos.

The UK ship recycling strategy published by the Department for Environment, Food and Rural Affairs (Defra) said only Birkenhead, in Merseyside, could match the North-East and cited its "vital experience in shipbuilding and other heavy industrial activity".

The strategy, which will now go out for a three month consultation, is a boost for Hartlepool firm Able UK and Swan Hunter, on Tyneside, which are both racing to have the relevant permissions in place to carry out ship scrapping work.

But it has dismayed environmentalists who have been bitterly opposed to controversial plans by Able to dismantle up to 13 rusting ships belonging to the American National Defence Reserve Fleet.

The strategy says nearly 400 commercial single-hulled tankers from across the European Union are due to be scrapped by 2010 and a further 30 vessels belonging to the Ministry of Defence will have to be decommissioned three years later.

Ministers accept it is no longer acceptable to rip apart Britain's defunct ships in dangerous conditions on beaches in countries in the developing world and are also attempting to clarify what is required of UK companies hoping to import ships for scrapping.

Able has claimed it could create hundreds of jobs by creating a Europe-wide recycling facility at its Graythorp yard, while at the same time warning that the work could go abroad.

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Ray Thompson, a marine sector specialist based at regional development agency One NorthEast, said: "We have been consulted on Defra's strategy and we are keen to see the economic benefits of ship decommissioning in the region.

"One NorthEast will look to work with companies in this field once any permissions required are in place."

But ghost ships campaigner Neil Marley, from Hartlepool, whose son, Ben, was one of three local people who fought Able in the High Court over its plans, said: "These ships need to be scrapped somewhere, but there are a lot of people who wouldn't like it in their back yard.

"Of the two North-East companies, I think Swan Hunter are more credible than Able, but I don't think many Geordies will be happy."

It was the Able UK site that hit the headlines and sparked the debate over the scrapping of the ghost ships when as part of an £11m contract, four US ships were towed there in 2003.

The company is awaiting permission from the Environment Agency to allow it to revamp its dockyard so the ships can be dismantled, amid concern about the impact planned dredging works will have on the nearby Seal Sands nature reserve.

Swan Hunter, which hopes to confirm a tie-up with Dutch firm Edocock, is one step ahead in its bid for a share of the international ship scrapping market, which is said to be worth about £3.5bn.

Unlike Able, it does not require planning permission for its site, needed as a first step before environmental licences are granted.

The Defra strategy said the agency would "welcome the establishment of compliant and economically viable ship recycling facilities in the UK".

It added that a number of facilities had expressed an interest, but suggested an ability to decommission oil rigs might also be needed to make such a business profitable.