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The second ship-breaking yard

The establishment of a ship breaking yard at Gwadar has been approved by the government. Balochistan already has one of the biggest ship breaking yards in the world in Gadani which is about 600 km away from Gwadar.

On one hand is the question of the impact on Gadani’s activities if Gwadar is to have a ship breaking yard as well. At its peak, the yard employed over 30,000 workers, most of which were hired on a non-formal basis of daily wages. Over the years only a fraction of scrap metal is now produced with a 2014 report by SDPI estimating 12,000 to 15,000 workers employed, depending on the supply of ships to the yard. If the re-rolling mills and smelters are to be taken into consideration then 850,000 dependent family members rely on the ship breaking industry. Despite being on the wane, Gadani’s ship breaking activities are important for the province’s livelihood.

On the other hand there are the dangerous working conditions. The industry in general is high risk with workers suffering from chronic acute health issues, exposure to deadly toxins, falling steel plates, and exploding gases. In the last six months alone there have been at least 2 fires at Gadani. Hazardous wastes that are recovered from the ships are not handled or stored properly but are either dumped around the yard or re-sold in the local market.

UN’s International Maritime Organisation passed the Hong Kong Convention in 2009 which is designed to improve the health and safety standards of current ship breaking practices. But NGO Shipbreaking Platform reports that it has been unable to prevent the practice of beaching of ships which is the cheapest and hence the most popular method of breaking them. It also results in most accidents. Since it requires 15 states and 40 percent of world merchant shipping to sign up for it to come into force, it is unlikely that the convention will be implemented.

However, there are 76 yards in India that are following Hong Kong Convention standards of safety. Infrastructure facilities such as impervious flooring are provided along with practices and process that ensure safe and environmentally sound recycling. Nearly a third of India’s imported ferrous scrap requirements are met through recycling.

Since most of the world’s freight is still conducted in ships, ship breaking is an important sector. A ship’s life is about 20 to 30 years after which it becomes too expensive to maintain. Ship breaking is the only way to dispose of end-of-life vessels. If global trade slows down, as it may do so because of the US China trade war, ship breaking activities will increase because aged ship may not be worth their costs. Investing in the ship breaking sector could be a good move since steel scrapping also increases domestic steel capacity.

However, if the purpose of the ship breaking yard at Gwadar is to increase Balochistan’s prosperity, impact on Gadani has to be considered.

Second, working conditions at the new yard cannot be similar to the current prevalent ones at Gadani. As India’s example shows, it is possible to have better working conditions while remaining profitable thus the second yard has to have higher health and safety standards.
Source: Business Recorder

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