Mighty dollar, rains sink Gadani shipbreaking industry

KARACHI: Work at Gadani Shipbreaking Yard has come to a grinding halt as a strong dollar has made buying of old vessels nearly impossible for the industry, while recent devastating rains also hampered the dismantling activities, The News learnt on Saturday.

Gadani is the world’s third largest shipbreaking yard after the Alang-Sosiya yard in India and the Chittagong yard in Bangladesh.

“No ship has arrived in the yard for the last two and half months because of high cost as dollar has broken all its previous records versus rupee,” said Asif Ali Khan, Vice Chairman Pakistan Ship Breakers Association, while talking to The News.

“First, it was the dollar rate that badly affected the shipbreaking industry in Gadani in the recent months and then the torrential rains in district Lasbela of Balochistan, completely stopped the work at the yard, which employs labour from district Lasbela as well as Karachi.”

Khan said the high value of the US dollar was sinking this industry fast.

“Gadani shipbreaking industry provides 20,000-25,000 direct jobs and 200,000-250,000 are indirectly related with the industry.”

The association official said while the rains washed away the infrastructure and caused heavy damages to people’s houses, they also halted the ship breaking work at the yard.

He pointed out that around five to six ships were being dismantled in the yard before the rains struck. “The downpours flooded all the plots so the work had to be stopped,” he said.

Gadani shipbreaking industry contributes Rs14-15 billion in taxes to the national kitty annually along with supplying millions of tonnes of steel to the country’s other industries every year.

According to Khan, this industry has a 20 percent share in the total steel supply of the country. "Shipbreaking industry mostly supplies long steel products, which are used in the construction sector."

This industry has the capacity to process three million tonnes of steel through dismantling of ships.

“The shipbreaking industry has informed the government about the plight of the sector; however, as long as the dollar remains on the higher side amid continued economic uncertainty prevailing in the country, there is little hope for any improvement for this industry,” Khan said.

Gadani shipbreaking yard is located around 40 kilometers or 25 miles northwest of Karachi.

It was established in the 1980s and was once the largest ship-breaking yard in the world and boasted over 30,000 direct employees. In the last many years it has been facing growing competition from the newer yards elsewhere in the region.

Around a million tonnes of steel are salvaged every year at this massive recycling facility. Bulk of it is sold locally. It is a risky and difficult work and according to reports the workers are not very well.

Gadani is capable of scrapping around 125 ships of all sizes - all the way up to and including supertankers.