This group tracks the responses of shipping industry towards environmental health concerns, highlights influence of shipping companies from EU, US and Japan etc on IMO and its Marine Environment Protection Committee & South Asian governments. It is keen to restore beaches in India, Bangladesh and Pakistan to their pristine glory for the coming generations. For more information visit: www.toxicswatch.org, banasbestosindia.blogspot.com
Such deaths have been routinely ignored by vessel owners and officials of the regulator, the Gujarat Maritime Board (GMB). But this time the news reached the Inter-Ministerial Committee (IMC) on ship-breaking, a wing of the steel ministry. And soon the Prime Minister’s Office was seeking details of the case from Dalip Singh, joint secretary at the ministry, about how the IMC planned to handle the crisis.
Central to the issue is the ministry draft code on safe ship recycling that was prepared following a Supreme Court order three years ago, but which vessel owners continue to pass over. A top GMB official rubbished the charges, claiming that the deaths had been meticulously reported by the board. “We do push ship-breakers to comply with all the regulations. But accidents can always happen,” GMB vice-chairman Pankaj Kumar said over the telephone.
Sources say 50-70 workers die every year at Alang. Alarmed, a Central government team led by Singh and S Machendranathan, additional secretary and financial adviser to the steel ministry, visited Alang last month and issued strict directions to the GMB and the ship-breakers to improve the working and living conditions of the roughly 5,000 workers at the yard.
Earlier this year, Okechukwu Ibeanu of the UN Human Rights Council, a special rapporteur on the baneful impact of the movement and dumping of toxic and hazardous products, had been shocked to see the appalling conditions in which the workers at Alang lived.
There are also concerns over environmental damage — about the reportedly chaotic manner in which beaching, cutting and shipbreaking in the inter-tidal zone are done. “It has long been obvious to experts that in such a zone these can never be done without harming the environment,” says Gopal Krishna of ToxicsWatch Alliance that works closely with the workers at Alang.
According to him, it is simply not possible to contain pollutants on a tidal beach where hulls of ships are often breached, or toxic paints erode, releasing organic pollutants, heavy metals and oils onto the beach and into the sea. But the ship-breakers have a different take on this. “The wet sand surface makes it impossible to install emergency gear in the hull,” argues Pravin Nagarsheth, president, Iron and Steel Scrap Association of India.
Now what does the regulator have to say on that?
Source: Tehelka Magazine, Vol 7, Issue 43, Dated October 30, 2010
Code of conduct for ship-breaking yards
Kunal Bose / October 26, 2010
The other day in a stormy evening, three workers at a ship breaking yard at Sitakundu in the Chittagong district of Bangladesh were crushed to death as a heavy steel plate fell on them. In nearly past two decades, no less than 500 workers were killed in accidents while at work at Sitakundu, home to the world’s second largest ship breaking yard after Alang along the Arabian Sea coast in Gujarat. This Bangladeshi toll is exclusive of many deaths, mostly unrecorded, caused by handling of hazardous waste materials and emission of toxic fumes.
Arguably, the scene at Alang was equally despicable till the Supreme Court started issuing orders to the government to ensure the safety, health and welfare of ship-breaking workers. The ministry of steel, again under the court directive, is formulating a code of conduct for the yards incorporating the recommendations of a committee of technical experts. A common problem of India and Bangladesh is that in spite court directives, ship-breaking yards, which were a law unto themselves till some time ago, are still prone to breaking rules. That’s why workers get killed or injured at yards not infrequently and areas in and around Alang and Sitakundu remain dangerously polluted. The scene is no different at Pakistan’s Gadani ship-breaking yard either.
NGOs and environment activists would want such yards to be shut. But since condemned ships are a good source of clean ferrous scrap good for direct rerolling into new steel products, governments of the three countries would rather subject yard owners in boundaries of discipline than go for yard closure. A Bangladeshi minister has made the government’s policy choice clear by saying that “our closing down the ship-breaking yard will turn the country into a market for foreign ironmongers. We are trying to create a separate zone for the industry in line with the prime minister’s directive.” India looks at the ship-breaking industry more or less in the same way.
According to G K Basak, executive secretary of Joint Plant Committee of the steel ministry, of India’s annual requirements of up to 12 million tonnes of ferrous scrap, as much as 3.5 million tonnes this year will come from dismantled ships, against 3 million tonnes in 2009-10. The generation of good quality rerollable steel in large quantities when ocean going ships are beached and dismantled underpins the importance of ship-breaking industry, its present pitfalls notwithstanding. While scrap steel originating in ships is the favoured feedstock for many rerolling units here, nearly 200 rerollers in Bangladesh depend heavily on about 2 million scrap generated at Sitakundu. Gadani generated over 850,000 tonnes of scrap last year for use by Pakistan’s rerolling industry.
Over 65 per cent of steel recovered from a condemned ship comes good for rerolling. But why so? This is because rerolling of ship plates require reheating of only up to 1,000 degree centigrade and that greatly restricts scale formation. Ship steel, as rerollers say, has fine grains giving it a good corrosion resistance character. A steel ministry paper says shapes and sections rerolled from ship steel are largely immune from physical defects like seams, internal cracks and furnace burns. Rebars made from low ductility ship steel lend themselves well to intensive cold twisting. Ship steel not found good for rerolling goes for melting.
Roughly 45,000 ocean going ships are floating on waters and each year up to 1,000 ships are beached. Ships remain seaworthy for up to 25 years. But there is a general tendency among ship owners to keep their vessels afloat beyond their useful life when the freight market stays buoyant. Like other sectors, freight market bore the burden of both financial crisis followed by downturn in world trade. Baltic main index continues to behave erratically. Shipping will always be impacted by what happens to the global economy, for nearly 90 per cent of traded goods globally are transported by sea.
In any case, at all times the three countries in this sub-continent will remain locked in competition to buy old ships. Ship-breaking, though it has a murky past, has an important bearing on the coastal economy of India, Bangladesh and Pakistan. It is a highly labour intensive operation providing jobs to both skilled and unskilled workers. The units at Alang accounting for over 90 per cent of the industry, provide employment to over a lakh of people. More than the revenue consideration for the government, what is important is that to the extent ship steel is generated and recycled either through rerollers or furnaces leads to conservation of iron ore, coal and energy.
This industry cannot be wished away. But at the same time strict vigilance of the work of ship breakers is called for. The government should also nudge them to use modern fuel based torches, mechanical cutters, detonation charges for handling very thick metal and cranes for transfer of steel and other materials. Why should the workers be pressured to carry heavy metal plates endangering their lives? Every time a ship is to be broken, it must have a comprehensive dismantling plan from the superstructure to the hull.
28 October 2010. Seattle, USA. – According to the toxic watchdog organization Basel Action Network (BAN), a U.S. flagged oil tanker named Prince William Sound, one that is part owned by BP and formerly was used to haul BP oil, is about to be sold for scrapping on the notorious shipbreaking beaches in South Asia. The ship, built in 1975 and whose namesake and owner are all too familiar reminders of recent environmental disasters, is likely to contain toxic wastes such as asbestos, polychlorinated biphenyls (PCBs) and other hazardous substances, and as such poses a threat to workers and the environment should it be exported to a developing country.
The vessel is reportedly moored now in a BP shipping depot in Malaysia, and its transfer is imminent. If the U.S. government fails to quickly intervene, the ship could be run up on the beaches of India, Bangladesh or Pakistan within days, where impoverished laborers break down ships by hand, subjecting them to explosions, accidents and occupational disease from exposure to toxic substances. This “beaching” method of scrapping ships is also devastating to local environments due to pollution and mangrove forest destruction undertaken to make room for the ships.
According to officials at the United States Maritime Administration (MARAD), the sale must first be approved by them based in part by a determination by the U.S. Environmental Protection Agency (EPA) that the export will not violate the Toxic Substances Control Act (TSCA) or other environmental laws. They have been notified by the ship’s owners (it is 25% owned by BP) of their intent to sell the vessel for scrap to a cash-buyer, a middleman who allows companies like BP to both sidestep controversy and avoid direct sales to Asian shipbreaking yards and also make a large profit by avoiding responsible and more expensive ship recycling in the U.S. or another developed country.
“BP is proving once again a callous disregard for people and the environment,” said BAN’s Green Ship Recycling Campaign Director, Colby Self. “The EPA and MARAD must step in now and prevent what could be another BP-sponsored environmental disaster.”
Unlike BP, Chevron opted this year to recycle two of its tankers in Brownsville, Texas, in accordance with strict U.S. environmental and labor protection laws. Chevron’s environmentally responsible ship disposal decisions in 2010 generated U.S. green recycling jobs at a time when U.S. jobs are much needed.
Due to the year of construction, the Prince William Sound likely contains PCBs, asbestos of other hazardous materials within its construction. The EPA has noted, “Although no longer commercially produced in the United States, PCBs are most likely to be present in vessels deployed before the 1979 PCB ban."  The Toxic Substances Control Act (TSCA), in force since 1979, prohibits the export of PCB contaminated material for disposal purposes. However, the U.S. EPA has long struggled to enforce TSCA against shipping industry violators, particularly when vessels operate outside U.S. waters and beyond EPA jurisdiction.
MARAD is required by law to authorize the foreign scrapping and reflagging to foreign registry of all U.S. flagged vessels; but in past years, BAN’s protests have revealed that MARAD’s review neglected to consider the potential violation of laws that were enforceable by agencies outside MARAD’s jurisdiction. As a result, many U.S. vessels were reflagged and sold or scrapped abroad in violation of TSCA. Now, MARAD and EPA have established a new process of review in which MARAD seeks EPA judgment to ensure compliance with TSCA prior to any reflagging or foreign scrapping authorization.
“The new Maritime Administration should be applauded for promising to more carefully monitor ship sales to prevent violations of U.S. environmental laws,” said Mr. Self. “But this is the test case. It’s time to take a stand and uphold environmental and labor protection laws for everyone, everywhere. We urge MARAD and EPA to halt this sale as a matter of urgency.”
For more information, contact:
Mr. Colby Self
Green Ship Recycling Campaign Director
Basel Action Network
+001 206 250 5652
 National Guidance: Best Management Practices for Preparing Vessels Intended to Create Artificial Reefs, http://www.epa.gov/owow/oceans/habitat/artificialreefs/documents/pcb.pdf
Dr Dalip Singh
Inter-Ministerial Committee (IMC) on Shipbreaking
Ministry of Steel
Government of India
Subject-Death of Alang Worker & New Draft Code on Regulations for Safe and Environmentally Sound Ship Breaking/Recycling
This is with reference to the death of Janardhan Choudhary, a 28 year old ship breaking worker, working in M/s Bansal Infra Co. Ltd. at yard no.154 Alang Shipbreaking yard, who died as a result of a fatal accident at work on October 12, 2010 at about 3.00 pm.
While he was working as a helper, scrap material from the ship fell down in the open wing tank manhole of the ship. He was shifted to hospital at Bhavnagar, 50 kms away from Alang and Sosiya ship breaking yards, where he died. Janardhan was a migrant labour from Siddhartha Nagar, an impoverished district of Uttar Pradesh. Why is the hospital 50 km away?. Does Ministry of Steel's Draft Code on Safe Ship Recycling address it adequately? Why has Gujarat Maritime Board (GMB) not been held accountable for its acts of omission and commission and why its structural competence to supervise secondary steel production through ship recycling has not been examined so far.
Even as the Steel Ministry is seized with the issue of 58 page Draft Code on Regulations for Safe and Environmentally Sound Ship Recycling prepared in compliance of the Supreme Court's order dated September 6, 2007 to improve the situation, each such death underlines the fact of non-improvement on the Alang beach. Since January 2010 alone, 17 workers have died while at work. Most of the workers are poor migrants from poor areas of Uttar Pradesh, Bihar, Orissa, Chattisgarh and Jharkhand and work for meagre wages in a hazardous and toxic working environment. Approximately 50 workers per year are killed on the Alang beach.
I wish to congratulate the central government’s team led by Mr S. Machendranathan, Additional Secretary & Financial Adviser and you for having visited Alang Beach, Bhavnagar, Gujarat on 17th September, 2010. The death of workers after your visit demonstrates the significance of such an initiative.
IMC’s site visit under Mr Machendranathan merits appreciation for it has issued strict directions to GMB and Shipbreakers to sort out the issue of housing facilities for workers in the shipbreaking industry within three months. Such sensitivity on the part of IMC is rare and environmental and labour groups are encouraged to expect similar action in the matter of enviro-occupational hazards.
Prior to your visit in Alang, there was a visit by Prof. Okechukwu Ibeanu, UN Special Rapporteur of the United Nations Human Rights Council on the adverse effects of the movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights. I wish to draw your attention towards the statement of the UN Special Rapporteur after his visit to India. Prof. Ibeanu during his 10-day mission, from 11 to 21 January 2010, assessed the progress made by the country in minimising the adverse effects that hazardous activities, such as shipbreaking have on the human rights of countless individuals working in these sectors or living close to the places where these activities take place. He visited a number of shipbreaking yards as well. His statement is attached.
Prof. Ibeanu has noted that in India, ships are currently dismantled on the beach, a method commonly referred to as “beaching”, and its actual impact on the surrounding environment and the livelihood of local communities relying on agriculture and fishing for their subsistence continues to be debated. “In order to ascertain the environmental impact of the shipbreaking industry, I recommend that an independent study be carried out to assess the actual and potential adverse effects that may be caused by the discharge of hazardous material into the natural environment, as well as the level of risk”, he said.
On behalf of the ToxicsWatch Alliance (TWA), I had accompanied the UN Special Rappartour and Stefano Sensi, Human Rights Officer, UN Human Rights Council during their visit.
The Special Rapporteur has finally noted that he was “shocked by the extremely poor conditions in which most workers live in Alang and Mumbai”. Semi-skilled and unskilled workers live in makeshift facilities lacking basic sanitation facilities, electricity and even safe drinking water. “I call on Governmental authorities to provide appropriate plots of lands, and facilitate the construction of adequate housing facilities for those who work in the yards. Adequate sanitation and drinking water facilities should also be put in place”. His report will be presented to the UN Human Rights Council.
As you are aware I have been in correspondence with the Steel Ministry and other concerned ministries. This letter is with reference to the current ship breaking/ recycling matters. I wish to draw your attention towards five specific issues:-
1. Having read the Chapter 10 of Annual Report of the Steel Ministry pertaining to shipbreaking and the minutes of the IMC meetings, I wish to submit that the minutes of IMC meeting held after 5.10.2009 are not available on the ministry's website as yet.
2. Although Hon'ble Supreme Court through its order dated October 14, 2003 mentions that an Inter-Ministerial Committee be set up for ship breaking comprising of labour and environmental organisations besides members of Ministry of Shipping, Ministry of Environment and Forests (MoEF), Ministry of Labour, Gujarat Maritime Board, Gujarat State Pollution Control Board, Central Pollution Control Board, Steel Scrap and Ship breakers Association etc, the same has not been done so far. More than 6 years have passed since the setting up of IMC but it has not invited workers and environmental groups to make their presentations and testimonies.
3. Although there is need for further modifications in the 58 page Draft Code on Regulations for Safe and Environmentally Sound Ship Recycling, having studied the Draft it is matter of relief that Ministry of Steel is making sincere efforts to comply with the Supreme Court order of 14th October, 2003 and 6th September 2007 to protect the fragile coastal environment of Alang Beach and the most vulnerable workers involved in the shipbreaking activity. While I will send a detailed comment on the Draft Code, I wish to submit few very crucial issues for your consideration.
In Chapter 3 of the Code at Section 3.1.2 there is mention of "dry dock" method for ship recycling among others. And in Chapter 6 of the Code at Section 6.6.1 (a) there is reference to Coastal Regulation Zone-1991 which has decreed the following regulation on 19th February 1991 under the reference Coastal Regulation Zone (CRZ) Notification, “For regulating development activities, the coastal stretches within 500 metres of the high tide line of the landward side are classified into 4 categories. Paragraph 2 of the Notification lists out the 'Prohibited activities and exceptions' The activities declared as prohibited within the CRZ, namely, Para 2 (ii) states, " manufacture, handling, storage or disposal of hazardous substances as specified in the 'Notifications of the Government of India in the Ministry of Environment and Forests' No. S.O. 594 (E) dated 28th July 1989, S.O. 996 (E) dated 27th November 1989 and G.S.R. 1037 (E) dated 5th December 1989. Para 2 (v) states, “discharge of untreated wastes and effluents from industries, cities towns and other human settlements."
It has been obvious to the vast majority of ship recycling experts and waste management authorities that the methodless process of “beaching" whereby ships are run aground on beaches for cutting and breaking apart in the intertidal zone can never be accomplished in a manner which is environmentally sound or protective of human health. Careful analysis of the intrinsic characteristics of beaching operations are conclusive that no amount of prescriptive improvements or protections can remedy the four fatal characteristics of intertidal beaching operations:
First there is the impossibility of containing pollutants on a tidal beach where hulls of ships are often breached accidentally or by cutting, or toxic paints erode or are abraded sending persistent organic pollutants, heavy metals and oils onto the beach and into the seawater;
Second, due to a shifting and soft wet tidal sand surface, there is the impossibility of rapidly bringing emergency response equipment, including fire-fighting equipment and vehicles, ambulances and cranes along side the ship, to assist or remove persons hurt inside the hull;
Third, the impossibility of allowing cranes to work alongside to lift heavy cut sections of a ship and thereby preventing heavy cut sections from being subject to gravity, shifting or falling directly into workers or into the marine environment; and
Fourthly, there is the absolute incompatibility of conducting hazardous waste management operations (which is what they are as long as ships contain hazardous wastes, in the ecologically delicate and vital coastal zone.
These fatal flaws of the beaching operations inevitably will result in causing avoidable death and pollution. No amount of band-aid guidelines and criteria can cure the malignancy inherent in beaching operations. To expect prevention of adverse effects to human health and the environment from massive toxic ships on an intertidal beach already makes the fulfillment of such objective impossible.
The worst outcome is that by not drawing a clear line at the outset, this fatally flawed beaching operation will get legitimized, millions might be spent into trying to mitigate the inherently inappropriate and dangerous working platform and the Code will have succeeded in perpetuating death and pollution for many years to come.
4. In the Draft Code there is reference to IMO Convention on Ship Recycling, I wish to submit that a vast body of civil society environmental, development human rights, and labor organizations besides the ship breaking industry itself have come together to condemn this Convention as a historical failure, if it cannot muster the political courage to cease the scandalous pretense that scrapping aged ships containing hazardous wastes and oils on ocean beaches in the intertidal zone might be somehow a viable way to achieve the safe and environmentally sound recycling of ships.
The Draft Code and its planners cannot remain “method neutral” as such a statement is “science deficient” in the matter of beaching operations. Such a stance of the Draft Code is morally deficient -- for to be “method neutral” is to be neutral on actual matters of life and death. How many of these deaths could have been prevented were proper equipment such as cranes, fire fighting vehicles, and ambulances been made accessible to the fallen workers?
The fact that countries such as Norway, member States of the EU, the USA, and Japan can pretend that this method is viable is in fact the height of hypocrisy, as such operations would be banned in those countries in an instant for violations of coastal zone management laws, occupational safety and health laws, and hazardous waste management laws.
The Code must include the following text:-"Ship Recycling Facilities authorized by the concerned government agency shall establish and utilize procedures to ensure that ship recycling operations taking place on intertidal flats, or ocean beaches or other working platforms which prevent: rapid access to ships by emergency equipment; the ability to utilize cranes and lifting equipment at all times alongside vessels; and the possibility of full containment of pollutants during all cutting and stripping operations, are prohibited";
Additionally, the Code's Safety Health Environment (SHE) policy should include provisions for technical assistance to GMB with an aim to direct funds toward phasing-out beaching based ship breaking operations and replacing it with dockside, slip, or dry dock platforms as a matter of urgency and responsibility. "Dry dock" does find mention in the draft Code as well.
5. I wish to draw your attention towards the unpardonable and unacceptable act of rampant forgery of documents in the ship breaking industry. The matter of dumping of Platinum II (MV Oceanic, SS Independence), a US ship on fabricated documents illustrated it in the most explicit way. Pursuant to my earlier communications, I got a letter from Director, Union Ministry of Environment & Forests dated 16 December, 2009 in response to my letter dated 10th December, 2009 "regarding "Platinum -II" raising certain issues relating to the ownership and port of registry of the ships arriving at Alang for breaking purposes."
I had argued that most of the ships which entered Indian waters post September 6, 2007 order of the Supreme Court in likelihood came on fake documents. Director, Union Ministry of Environment & Forests wrote to me, "Since Ministry of Steel is the nodal Ministry for shipbreaking activities in the country, your representation has been forwarded to the Ministry of Steel (copy enclosed for ready reference)." I wish to know whether there has been any probe in the matter of ships that have entered Indian waters on fake documents in general and in the particular case of Platinum –II.
6. The Draft Code does not take cognisance of the fact that Basel Convention on was signed by India on 15th March, 1990 and ratified on 24th June, 1992. In keeping with the same, the Code should refer to the recommendations of High Powered Committee headed by Prof. M G K Menon, incorporate Basel Convention's Technical Guidelines for the Environmentally Sound Management of the Full and Partial Dismantling of Ships (attached), Central Pollution Control Board (CPCB)'s Technical Guidelines on Ship breaking and reproduce the ship breaking specific directions of the Supreme Court dated 14th October, 2003 (repeated ad verbatim in the 6th September, 2007 order).
The apex court's order reads, "(16) At the international level, India should participate in international meetings on ship-breaking at the level of the International Maritime Organisation and the Basel Convention's Technical Working Group with a clear mandate for the decontamination of ships of their hazardous sub-stances such as asbestos, waste oil, gas and PCBs, prior to export to India for breaking." One of the fourteen Terms of Reference on which the High Powered Committee was to give its report and recommendations "Decontamination of ships before they are exported to India for breaking.” The apex court's order endorsed Basel Convention. (Order is attached)
The CPCB states in its 'Environmental Guidelines for Shipbreaking industries', "Old vessels containing or contaminated with substances such as PCBs, waste asbestos dust and fibre, lead and lead compounds are accordingly classified as hazardous materials. The customs authority and /or the concerned State Maritime Board should ensure this and issue a certificate to this effect that the vessel is free from prohibited materials." So far IMC has not been able to make Gujarat Maritime Board (GMB) comply with such guidelines.
I have learnt that GMB misled this Supreme Court’s Inter-Ministerial Committee (IMC) on Ship breaking into visiting Alang Beach on a holiday because 17th September was a Vishwkarma Puja Day, a holiday to assess the workers living and working condition. In the aftermath of the workers death on October 12, GMB and other concerned agencies must be made to face exemplary punishment
In view of the beleaguered marine environment of the beaches and desperate workers,
I am hopeful of a positive outcome from the deliberations of the IMC.
While the vital steps that I have proposed will be helpful, you may refer to relevant case laws at: http://www.basel.int/ships/relevcaselaw.html as well.
I will be glad to share more information. I will send a detailed comment on the 58 Draft Code shortly.
Focal Point, Platform on Shipbreaking
Ban Asbestos Network of India (BANI)
Skype id: witnesskrishna
Shri S. Machendranathan, Additional Secretary & Financial Adviser, Ministry of Steel
Sh L Siddhartha Singh, Director, Ministry of Steel
Dr Saroj, Director, Ministry of Environment & Forests
Janardhan Choudhary, a 28 year old ship breaking worker, working in M/s Bansal Infra Co. Ltd. at yard no.154 Alang Shipbreaking yard, died as a result of a fatal accident at work on October 12, 2010 at about 3.00 pm.
While he was working as a Malpani (helper), scrap material from the ship fell down in the open wing tank manhole of the ship. He was shifted to hospital at Bhavnagar, 50 kms away from Alang and Sosiya ship breaking yards, where he died. Janardhan is a migrant labour from Siddhartha Nagar, an impoverished district of Uttar Pradesh. He is married and his family stays at his native place.
Mr. Ram Patel, Vice President of Alang Sosiya Ship Recycling & General Workers Association (ASSRGWA) along with colleagues rushed to the hospital.
The ASSRGWA demanded strict action against the employer and the Labour Department for non-enforcement of safety measures on the yards statutory compensation and dues to the family members of the deceased worker.
The ship breaking industry in Alang and Sosiya employs over 55,000 workers. Despite the number of deadly accidents and hundreds of workers' death, a full-fledged hospital is 50 kms away.
According to a survey published by International Metalworkers' Federation in 2007, on average 50 workers per day get injured and some of them seriously.
In India, pursuant to Supreme Cout order, a Draft Code on Regulations for Safe and Environmentally Sound Ship Recycling (As on 30.09.2010) IMC Members are requested to send their comments/suggestions by e-mail to email@example.com (Kind attention:-Under Secretary,MF Desk,Ministery of Steel,Udyog Bhawan,New Delhi 110107)(As on 30.09.2010)
In Pakistan, construction and engineering industries depend on the steel re-rolling industry, which acquires its raw material from ship-breaking or imported scrap.
Under the new policy the steel production target was set at 10 million tonnes by the year 2015 and 15 million tonnes by the year 2020. The present capacity of steel production is four million tonnes as against demand of over 6 million tonnes per annum, showing a gap of 2.5 to three million tonnes, that is, being met through import. The steel production units are functioning bellow capacity because of raw material shortage and slack demand.
To expand the steel sector huge amount is needed that Pakistan cannot afford. Besides, other elements like security of investment, foreign experts and continuous availability of raw materials at reasonable prices, uninterrupted supply of electricity is also required that lacks in Pakistan. Moreover, the steel sector is directly linked with the international market where iron and steel prices are on the rise and Pakistan has to follow the trend, as it cannot stand alone.
The steel re-rolling industry of the country is presently facing numerous problems as it is not getting raw material in sufficient quantity and utilising only 40 percent capacity against normal use of 80 to 90 percent. Moreover, due to slowdown in the construction activities, sale of steel products has decreased. For instance the production capacity of the re-rolling mills in Karachi was 5,000 tonnes per day, but the demand was only 2,000 tonnes per day.
Due to the shortage of raw material and other problems the prices of steel bars in the domestic market had at a time reached Rs 87,000 per tonne, which are now available at Rs 55,000 per tonne. The price was the lowest at Rs 40,000 per tonne last year when the scrap ships prices were at $250 per tonne to $280 per tonne in the international market.
The scenario of the steel sector in Pakistan indicates that this industry has a bright growth potential. The per capita consumption of steel in Pakistan is only 38 kilogrammes (kgs) as against global average of 175kg. If very modest increase in per capita steel consumption took place and reached 80kg in the next 10 years, the steel demand would be 16 million tonnes per annum for a population of about 200 million by the year 2020.
However, a 26.9 percent negative growth rate was recorded during July-March 2009-10 in steel products. Among the major factors behind this was the financial crunch in Pakistan Steel Mills (PSM).
World over the unprecedented economic slowdown started in 2008. It caused crash of steel products market in terms of both price and quantity wise and the production of steel industry had suffered very badly during 2008-09, which continued during 2009-10
Pakistan is an importer of basic raw materials of steel and due to the above situation PSM has suffered huge losses of Rs 26.5 billion in 2008-09, even it has not been able to import basic raw materials, iron ores and coal, as per its requirement. During July 2009 to February 2010, capacity utilisation was at 43 percent only.
Future plan: The domestic consumption of steel products is around 5.6 metric tonnes per year. Expansion in the production capacity of Pakistan Steel to three metric tonnes per year or above was planned. The plan would be implemented in two phases and completed in the next three to five years.
Pakistan Steel has also started an indigenisation programme to replace costly imported iron ore by locally available material and it is expected that 250,000 metric tonnes local iron ore will be arranged for PSM this year, which will be enhanced to 500,000 metric tonnes within the next three years.
Ship-breaking industry: The ship-breaking industry played an important role in developing steel industry in Pakistan. This industry started in 1970 and reached to its peak in 1980s.
The ship-breaking industry is an indispensable part of the economy for developing countries since it requires a small amount of investment and being mainly dependent on manual labour and is a good source of employment for the locals. From the point of ship owners, it provides a cash flow for the renewal of fleet, by disposing irreparable ships.
Ship breaking is perhaps as old as the shipping industry itself. It is the process of dismantling of an obsolete ship’s structure for scrapping. The scrapped metals, steel or iron, are used by the respective re-rolling industries as raw material whose products are used by the construction and engineering industry in Pakistan.
A ship’s life lasts for an average of 25 to 30 years after that it is supposed not safe to sail. About 95 percent of these ships are dismantled to recover steel. Scrapping a ship can make the owner an earning of about $1.9 million. However, the ships built before the 80’s have tonnes of extremely toxic substances, hazardous to human and environmental health.
Conducted at a pier, dry dock or dismantling ship includes a wide range of activities, from removing all gear and equipment to cutting down and recycling the ship infrastructure. The activity is a challenging job due to complexity of the ships and the environmental, safety and health issues involved.
In the early days wooden ships condemned were often burned or even carefully ‘lost’ in some convenient spot. Today the ship-breaking industry is run on scientific lines, and nothing is wasted. Sooner or later, every ship that sails into the sea is going to make its last voyage and the odds are that final journey will last at one of the ship-breaking yard on the coast of India, Pakistan or Bangladesh. The term ‘ship-breaking’ is slowly being replaced by ‘ship-recycling’.
In the 1970’s ship-breaking was done in the docks of Europe. It was supposed a highly mechanised industrial operation. But as European countries became more environmentally conscious they started taking health and safety measures, which escalated costs of scrapping. Therefore, about 90 percent of the ship-breaking industry moved to Asian countries, like India, Bangladesh, China, Pakistan and Turkey, as these countries were less environmentally and health conscious. Every year about 600 to 700 ships die and are brought to the beaches of Asia for scrapping.
From early 1980s to maximise profits ship owners sent their vessels to the scrap yards of India, China, Pakistan, Bangladesh, the Philippines and Vietnam where wages, health and safety standards were minimal and workers were ready to accept minimum wages. It was estimated that over 100,000 workers were employed at ship-breaking yards worldwide. Of them about 45,000 ocean going ships in the world about 700 (1.55 percent) are taken out of service every year. At the end of their sailing life, ships are sold so that the valuable steel, about 95 percent, of ships mass can be reused.