Pakistan still has the dubious honour of being among the top three ship breaking countries in the world as per a recent report by UNCTAD. While ship breaking is most closely associated with hazardous working conditions and environmental degradation, its potential for providing steel and decreasing the import bill has been overlooked in recent years.
Since the 2016 fire which killed several people and burnt numerous others, Gaddani’s ship breaking activities have become somewhat of a taboo. What appears to be forgotten is that it used to be an important source of steel, producing nearly a million tons a year. Even now, media reports suggest that 30 percent of domestic iron requirements are met through ship breaking.
95 percent of a ship is made from steel which is then sent on for re-rolling to be converted into bars, plates, and rods. An SDPI report estimates that a maximum of 850,000 people have been dependent directly or indirectly on the sector since Gaddani has had provide raw material to about 200 re-rolling mills. Furthermore, SBP’s recent quarterly report suggest that overall demand for steel has outpaced growth in domestic supplies, hence the reliance on imports is increasing. In FY17, ferrous scrap imports were roughly $1 billion.
Even keeping the austerity drive and curtailment of CPEC aside, imposition of anti-dumping duty on finished steel products and housing schemes in pipeline results in heightened steel demand. While the abysmal working conditions in Gaddani are a source of grief, a leaf should be taking from the neighbouring country in improving working conditions without ignoring an economically viable and vital sector.
India is ahead of Pakistan in ship breaking activities. About 28 percent of country’s total imported ferrous scrap is met through ship recycling. While the conditions were as below par as Pakistan’s a few year back, strides have been made to meet the standards set by International Maritime Organisation, Hong Kong Convention. This includes improving infrastructure facilities such as impervious flooring as well as practices and processes that ensure safe and environmentally sound recycling. India has also imposed anti-dumping duties on promote its ship scrapping activities.
As most of the world freight is still conducted in ships, ship breaking is an important sector. Globally more than a 1,000 ship are dismantled every year. A ship’s life is typically 20 to 30 years after which it becomes too expensive to maintain and repair and thus it is sent for decommissioning where ship scrapping is the only way for disposing end-of-life vessels. When global trade slows down, as it is expected to do so with the trade war between US and China, ship breaking activities increase because older ships are not worth their costs.
Gaddani has the capacity to produce 1 – 1.5 million tons of steel a year, especially since it is possible that more ships will require recycling. Instead of ignoring accidents or addressing issues by halting activity, it behooves authorities to make use of Gaddani’s natural attributes to develop its ship breaking facilities. Previous scrapping nearly a 100 ships a year; it only has had 20 ships beached this year. Supporting ship scrapping in Pakistan will increase domestic steel capacity and hence decrease reliance on imports as well as protect and generate employment for thousands.
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