The Blue Lady, formerly the SS Norway, stands in shallow water at the ship breaking yards in Alang, India. A sign in the foreground reminds workers to use safety equipment. ©Ken Moritsugu/MCT

Permanently laid up by a 2003 boiler-room explosion that killed eight crew members in Miami, the ship was towed halfway around the world to India and run aground at Alang, a six-mile stretch of beach that's the world's largest ship-scrapping yard.

Here, the Norway is to be picked apart by hundreds of workers, its pieces sold for scrap. But like a death row inmate, its fate remains in limbo.

Environmentalists have sued to stop the ship from being broken apart, arguing that more than 1,300 tons of "asbestos-containing material," mostly wall and ceiling panels, should have been removed in Europe, where safety standards are higher, before the Norway was towed from Germany to Malaysia and then to Alang.

That lawsuit has frightened India's ship-breaking industry. Business already is slow because of competition from Bangladesh and a slowdown in the global ship-scrapping market. If ship owners are forced to detoxify their ships in Europe, they may find it more cost-effective to junk them there too.

Last February, environmentalists got the French government to recall the Clemenceau, an asbestos-laden 1960s-era aircraft carrier that was headed to Alang. Now they've asked the Indian Supreme Court to block the scrapping of the Norway, which has been renamed the Blue Lady. A hearing is scheduled for Dec. 4.

Nikhil Gupta, the secretary of the Ship Recycling Industries Association (India), which represents the ship-breaking companies at Alang, begs environmentalists for a chance.

"If we are able to successfully scrap the Blue Lady, they will have no answer to it, and maybe it will open the gates to more Blue Ladys or Clemenceaus," he said in an interview in Bhavnagar, the nearest major city to Alang. "And if we are unable to do it, maybe they are right, and we will need to improve."

For many years, the ship-scrapping yards at Alang were the most notorious in the world. Before the slowdown, tens of thousands of workers toiled under the hot sun for $2 a day, cutting great ships apart with torches and salvaging whatever could be resold. Many lived in hovels. Little, if any, safety equipment was used.

Two of every 1,000 workers died from 1995 to 2005, a death rate nearly six times higher than in the mining industry, which is considered one of the most dangerous in India. The most common causes were falling from great heights, fire and being hit by falling objects.

The industry thrived on a simple economic principle: It was cheaper to use hundreds of workers to tear apart a ship on a beach in India than to hoist it out of the water at a dry dock in Europe and rely on machines - operated by fewer but much higher-paid workers - to do the job.

Alang opened in 1983 and gradually grew to 173 yards. Solid fences block entry to the yards - a flood of bad press has turned the ship breakers publicity-shy - but the towering hulks of half-broken ships are visible above the closed gates.

A bulk container ship tilts forward, lopped off in front of the tower where the captain once sat. Even an offshore oil derrick, standing tall on four bulbous legs, has made its way here. Each ship produces thousands of tons of metal, which are recycled into scrap steel.

"The ship breaking industry . . . has reverted back to labor intensive technology, since the high tech proposition has proved more costly," Priya Blue Industries, the ship breaker that has the rights to scrap the Norway, notes on its Web site.

Environmentalists would like to reverse that trend. "The correct way to do this job is not as labor-intensive as it is done in India," said Seattle-based activist Jim Puckett, who acknowledges that changes could doom Alang. "Without the cheap labor advantage, India will no longer be seen as an economical choice."

Another factor clouds the debate: jobs. Despite the safety risks, workers from impoverished regions of India travel 1,000 miles to find work at Alang. For worker advocates, that presents a conundrum.

"Our stand is clear. We are not for unsafe work," said Arun Mehta, a trade union leader and Gujarat state secretary of the Communist Party of India. But, he added, "We are in favor of the ship-breaking industry. We want more employment generated in the ship-breaking yards."

The number of ships broken down at Alang fell from a peak of 361 in 1998 to 101 last year. Employment has plunged to fewer than 5,000 workers from 35,000.

A shipping boom is keeping older ships at sea, so fewer are being scrapped. And Alang, once the global leader in ship breaking, now trails Bangladesh, where wages are even lower and the price of scrap steel is higher.

The ship breakers are scrambling to keep business in Alang.

Safety training and equipment have been introduced. A new asbestos-disposal plant stands near the breaking yards. The industry group is negotiating with Indian hazardous-waste companies to take over removing the asbestos, which is thought to cause cancer and can produce a sometimes-fatal lung condition called asbestosis.

"We cannot carry on with the Stone Age ways of doing it," said Bipin Aggarwal, the vice president of the ship-breakers association. "The world is changing. Everything is becoming global. All these rules and regulations have to be observed. We cannot ignore them indefinitely."

Ship owners are working with the International Maritime Organization, a London-based United Nations agency, to develop international regulations for ship disposal.

"They realized the time had come for the industry to change its ways and contribute a solution to the problem," said Nikos Mikelis, a former shipping consultant who's now at the International Maritime Organization.

One proposal would create a system of approved ship-breaking yards for handling hazardous waste, he said.

Puckett dismissed the industry efforts. "It's window dressing," he said. "India is so far away from the conditions to do the job correctly that these efforts are seen as futile."

However the environmental questions are resolved, a mystery still surrounds how the Norway came to leave Europe. The European Union bans member countries from exporting hazardous waste to poor countries.

Nonetheless, in May 2005, the Norway was able to leave the German port of Bremerhaven, where it had been towed after the Miami explosion.

Environmentalists accuse Star Cruises Ltd., the Malaysia-based owner of the Norway, of concocting a cover story that it intended to reconstruct the ship in Malaysia as a hotel or training ship. A German state government minister said he believed that that was the reason the ship was being towed to Malaysia.

Miami-based Norwegian Cruise Lines, a Star Cruises subsidiary that operated the Norway, denied that its parent had misrepresented the Norway's likely future to the German government. In a statement, Norwegian said Star Cruises hadn't decided to scrap the ship when it left Germany and had continued to look for a buyer until December.

But a July 2005 letter from lawyers for Norwegian to the U.S. Securities and Exchange Commission seems to contradict that, saying Star Cruises decided in late 2004 that "the most likely scenario for disposal of the ship would be sale for salvage."

In any case, five months after arriving in Malaysia, the ship was sold for scrapping. In a letter to shareholders, Star Cruises said the sale netted $14.1 million.

The ship's saga was hardly over. Bangladesh refused to give permission to scrap the ship there because it contained asbestos. Last May, the ship was towed out of Malaysia's Port Klang to Alang, where it sits in the mud, awaiting word from the Indian Supreme Court.

Moritsugu is a McClatchy Newspapers special correspondent.