Revitalizing Pakistan’s Shipbreaking Industry: A Path to Sustainability
Shipbreaking, also known as ship recycling or dismantling, is a crucial process for recovering recyclable materials from decommissioned vessels. This industry plays a significant role in Pakistan’s economy, particularly at the Gadani shipbreaking yard, located approximately 60 kilometers southwest of Karachi. Historically, Gadani was the largest shipbreaking facility in South Asia during the 1980s and currently ranks as the third-largest globally, following Alang in India and Chattogram in Bangladesh. However, the industry has faced challenges, including increased competition and high import duties on decommissioned vessels, leading to a notable decline in output.
The shipbreaking sector in Pakistan has the potential to evolve from a scrap-driven model into a robust industrial force. By aligning with international conventions and enhancing environmental safety, Gadani can position itself as a competitive recycling hub. While recycling facilities exist in Europe, North America, and the Caribbean, South Asia remains the primary location for shipbreaking, with around 1,000 ships scrapped worldwide each year. Of these, 65-75% are processed at Gadani, Chattogram, or Alang.
Recognizing the economic potential of the shipbreaking industry, the Government of Balochistan established the “Balochistan Shipbreaking Industry Rules-1979” under the Balochistan Development Authority (BDA) Act of 1974. This initiative aimed to regularize the sector, designating Gadani as a port, reducing import duties on dismantling ships, and forming a government task force to address infrastructure and logistics challenges. Following these regulations, the industry saw a surge in employment, peaking at over 30,000 workers in the 1980s. However, by 2001, competition and high import duties had drastically reduced employment to around 6,000 workers.
Challenges and Opportunities for Growth
The shipbreaking industry in Gadani faced a significant setback in 2016 when a catastrophic explosion occurred during the dismantling of a ship, highlighting ongoing safety issues. Despite government incentives to revive the sector, such as reducing shipbreaking taxes, the industry struggled to maintain its output. By 2023, direct employment in Gadani had dwindled to just 100 workers, reflecting a broader decline in ship demolition activities.
The decline in shipbreaking is not unique to Pakistan; it mirrors global trends influenced by various factors. Shipowners are opting to keep vessels in service longer due to favorable freight markets, which delays scrapping. Additionally, lower steel and scrap prices have diminished the financial returns from recycling. Stricter environmental compliance costs and refurbishment efforts further complicate the landscape, leading to fewer ships being sent for dismantling.
Despite these challenges, there is a silver lining. Gadani has the potential to modernize its operations and enhance its competitiveness. Eleven yards are nearing completion for eco-friendly operations, with an additional 20 expected to begin green recycling by June 2026. This modernization could establish Gadani as a global model for sustainable ship dismantling. According to a 2023 report by the United Nations Conference on Trade and Development (UNCTAD), Pakistan accounted for 16.6% of global ship recycling in 2022, generating approximately PKR 12 billion annually.
To regain its status as a leading shipbreaking destination, Pakistan must comply with international safety and environmental standards. By meeting the requirements of the Hong Kong Convention (HKC), such as maintaining Inventories of Hazardous Materials (IHM) and implementing certified Ship Recycling Plans (SRPs), Pakistan can attract higher-value vessels from international shipowners seeking environmentally responsible recycling options.
