South Asia: world's ship scrapping yard

Preferred destination for dead ships

• South Asia dominates the ship-breaking industry
• India, Bangladesh and Pakistan together account for close to 67 per cent of the global ship recycling market, according to data obtained for 2011. Significant recycling activity also takes place in China (21 per cent) while Turkey and other countries account for the balance 12 per cent
• Asian countries dominate the industry because of lower manpower cost and relatively less stringent environmental and health regulations compared to western countries
• India, Bangladesh and Pakistan, by virtue of their naturally favourable tidal conditions, are able to use the beaching technique for ship breaking which is less capital intensive and hence more cost effective in comparison to the advanced dry dock method. This has enabled these countries to become the preferred ship dismantling destinations

India’s ship breaking yards

• India, with its natural geographical advantage of a high inter-tidal gradient, favourable weather conditions and low manpower costs, has emerged as a leader in terms of both volume and number of ships broken
• Ship breaking yards are located in the states of Gujarat, Maharashtra and West Bengal
• Most ship breaking activity is concentrated in the Alang and Sosiya yards in Gujarat. Alang alone accounts for more than 90 per cent of the ships dismantled in India.
• Till the early 1990, the ship-breaking industry in India was still in its infancy. About 72 plots existed at Alang
• After economic liberalisation in 1991, the ship-breaking industry started growing rapidly following increased domestic steel requirements, particularly from the large number of rolling mills that were set up at the same time
• The Gujarat Maritime Board (GMB) issued a large number of licenses for plots; as per estimates, there are currently close to 160 plots in use as ship recycling facilities, having a maximum capacity of about 4.58 million tonnes per year of steel scrap production

The business of recycling ships

• The volume and number of ships dismantled has been increasing. According to industry sources, more than 400 ships were dismantled in the financial year 2011-12 in India
• According to the annual report of the Union Ministry of Steel, the steel scrap generated from ship recycling contributes to around 1 per cent to 2 per cent of India’s domestic steel demand, and is primarily a source of raw material for re-rolling mills
• Bouts of weak global freight rates make it expensive for ship owners to operate old ships. This generates a surge in ship-breaking activity. Depressed global freight rates since 2009, and high prices for steel scrap have resulted in a spurt in ship-breaking. In 2009 and 2010, the volumes in global ship-breaking aggregated around 44 million gross tonnage (GT)--twice the volumes of the four preceding years
• Ship breakers purchase ships anywhere between $450-500 a light displacement tonnage or LDT, which is a measure of the amount of steel in the ship. Steel blade and steel scrap makes up anywhere between 80-85 per cent of ship breaking revenue

Workers at the yards

• According to a survey by International Metal workers’ Federation, the people who work in the ship-breaking industry are mostly migrant workers
• High concentration of workers is found mainly in Alang and Sosiya in Gujarat, in Mumbai, Maharastra and scrap handling yards and re-rolling mills in Bhavnagar, Gujarat. There are some 55,000 workers directly employed for ship scrapping in Alang and Sosiya, about 6,000 workers in the Mumbai ship-breaking industry, and over 160,000 workers are employed in associated downstream activities

Business may divert to other countries

• Under the UN’s Basel Convention  on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, a ship has to be fully decontaminated before it is allowed to anchor at a ship-breaking port
• The Supreme Court of India, in its ruling in July, 2012, has banned import of ships carrying hazardous and toxic wastes and has ordered strict implementation of the Basel Convention
• A stricter implementation of the Basel Convention in India can result in end-of-life ships being sent to other competitor countries that may not be following the Convention strictly. This can negatively impact the business volume for the ship-breaking industry in India.

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