Pakistan’s ship-breaking industry revives

Industry seeks government help

By Ali Jamal

2012-03-26

KARACHI – The clang of metal and the smell of burning steel as blowtorches cut through ship hulls are again in the air as Pakistan’s ship-breaking yards enjoy a revival.

High international prices for worn-out ships, which Pakistani yards were not willing to pay, and high Pakistani duties imposed on the scrapping yards caused the industry to stagnate. Now, though, the price trend is reversing. Last year, companies had to pay $500-$530 (Rs. 42,600-48,000) per metric tonne for ships; this year, it is $450-$475 (Rs. 40,700-43,000), according to Diwan Rizwan Farooqi, chairman of the Pakistan Ship Breakers Association.

That, coupled with an increase in demand for scrap steel by the construction industry, is helping ship-breaking, which employs 125,000-150,000 in Pakistan, stage a comeback, he said.

Pakistan once led the world in ship breaking but now occupies third place because other countries were willing to pay higher prices for the worn-out ships and because of differences in currency exchange rates.

Pakistan’s ship-breaking industry peaked in the 1970s and 1980s, annually feeding 1m metric tonnes of scrap metal to the steel industry. The industry started slumping in the 1990s but is turning around now. Pakistan forecasts processing 850,000 metric tonnes of scrap this year, up from 650,000 in 2011.

Tonnage is a more important measure of production than the number of ships, because ship sizes vary, but even ship numbers indicate a comeback. During its peak years, Pakistan dismantled 150-175 vessels per year. During the slump, the number fell to 30-40 per year. Last year, workers dismantled about 100 small to medium-sized ships; this year about 90 large vessels are expected.

Workers hope for salary increases

Workers share makeshift rooms near the 127 berths of a ship-breaking yard at Gadani beach. At least 1,000 workers toil at each of the active berths, but many berths are idle.

Workers hope to see further growth in the industry and higher wages to help them make ends meet. Each worker earns Rs. 450-600 (US $5-6.60) daily, depending on his skill.

Irakmullah Khan, using a blowtorch to dismantle an oil tanker, said he misses his family back in Khyber Pakhtunkhwa, but he thanks Allah he has a job enabling him to support his family of seven.

“In this time of economic crisis, I am not able to save anything,” he told Central Asia Online. “All my earnings go for the expenses of my family.”

Still, local young people have once again started applying for jobs in the industry – which they previously shunned due to the labourious long hours, Farooqi said. But the industry offers salaries that are higher than comparable jobs and increase with experience, he said.

“It’s good to see them work too,” said Muhammad Nasir, a Kashmir native. “They are now learning how to use the welding machine and are doing all that others do.”

Challenges ahead

As long as ships remain expensive, the local industry – which has to buy the ships it takes apart – will find it difficult to expand, Farooqi said.

The scrappers extract more than steel from the hulks. They also remove basins, toilets, cupboards, doors and other items that are either installed in the workers’ colony or sold in the local market.

“Everything sells,” said Ramzan, a shopkeeper in Shershah, Karachi. “We get all sorts of things. Tools, ship paint, bulbs, wiring and air conditioners come to the godowns (warehouses). The price is good as it is imported stuff, but there is no guarantee for electric items.”

But ship-breaking yards are often ill-equipped to cope with emergencies, and the yards often lack protective equipment.

“We have two small hospitals, but most cases have to be rushed to Karachi, which is 50km from here,” said Muhammad Ishaq, a Kashmir native who works at the Gadani yard.

The Pakistan Ship Breakers Association said the government should make improvements for the industry.

“The government gets billions of rupees from this industry,” Farooqi said. Last year the industry generated Rs. 2.95 billion (US $33m), a number that is predicted to grow to Rs. 4.1 billion (US $45.3m) this year, he said. “Still, there is no electricity, no communication, no system, or any other essential thing at Gadani.”

“The provincial government is taking much interest in resolving problems of the ship-breaking industry,” said Provincial Labour Minister Maulvi Muhammad Sarwar. Public and private sectors are collaborating on plans to install a 50MW power plant to provide electricity in Gadani, for example, he said.

The federal government, on recommendation of the provincial government, also reduced the industry’s tax burden this year, Sarwar said.

Farooqi admitted that some progress had been made. During the industry’s slump, taxes and duties were about 80-90% of the cost of the ship; now, they are 40-45%. But he called for a reduction in the sales tax, currently at Rs. 4,800 (US $53) per tonne.

Zia ur Rehman contributed to this report

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Reader Comments

  • Thanks for your useful information regarding the ship-breaking industry in Pakistan. My question is that whether spare parts for Volvo products can be found in Shershah or not. Thanks!

    January 16, 2013 @ 09:01:54PM ناصر
  • Govt must take serious action about the interference of wadairas of gadani in the industry.

    November 14, 2012 @ 10:11:37AM AFTAB
  • Good and comprehensive detail about the ship breaking industry.

    May 9, 2012 @ 10:05:08AM Adnan Sharif
  • pakistani ship breaking industry is very old ,Ithink it was started in 1960 but due to political activites govt is not inposition to finance this industry govt facing tomuch expenses due to war specely asia entire world is taking intrest due yo hotwater in afgistan they dont have sea

    March 26, 2012 @ 11:03:49PM RiazAgha