India: End of the line for shipbreakers

In the world’s biggest ship recycling center, workers with blowtorches cut segments of steel stripped from the rusting hull of a towering cargo ship, sold for scrap by its Japanese owner.

Here in the town of Alang on India’s Arabian Sea coast, however, more than half of the shipbreaking yards have shut down in the past two years. The future of this trade is bleak in India and for its neighbors Bangladesh and Pakistan.

The industry has been hit by a flood of cheap Chinese steel and new European Union environmental rules that threaten to push business to more modern yards in places such as China and Turkey, in turn devastating local economies.

“People are running this business from their heart, not from their mind,” said Chintan Kalthia, whose company R.L. Kalthia Ship Breaking Pvt Ltd. runs one of Alang’s more modern yards.

Ships sold to South Asian breakers, which control about 70 percent of the market, are winched at high tide onto a beach, where they are taken apart by mostly migrant laborers.

With a plunge in steel prices, shipowners are getting about U.S. $3.6 million less for the 25,000 tons of recoverable metal from a typical iron ore- or coal-carrying ship than they did at the end of 2014.

The situation in Pakistan appears equally bad. “It has always been a cyclical business, but people who have been in this industry tell me this is the worst in 30 years,” said Shoaib Sultan, the owner of Horizon Ship Recycling in Karachi.

As well as facing pressure from cheap Chinese steel, there are also calls to stop beach scrapping because of the danger and environmental damage from pollutants left to drain into the sea. Reuters