Ship Breaking Industry in Pakistan

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UNIVERSITY COLLEGE BUSINESS COMMUNICATION REPORT ON SHIPBREAKING INDUSTRY IN PAKISTAN AND ALUMINUM METAL Page 1 of 33

Transcript of Ship Breaking Industry in Pakistan

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UNIVERSITY COLLEGE BUSINESS COMMUNICATION

REPORT ON

SHIPBREAKING INDUSTRY IN PAKISTAN AND ALUMINUM METAL

Submitted To: Submitted By:Mr. Nadeem Faraz Ahmed Umair AliUniversity College Reg. No. A 11027080

Faculty of MBA (II)

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TABLE OF CONTENTS

Preface ---------------------------------------------------------------------------------------- 3Acknowledgements ------------------------------------------------------------------------

4Executive Summary------------------------------------------------------------------------

5

SHIPBREAKING

What is Shipbreaking? ----------------------------------------------------------- 6

History of Shipbreaking ---------------------------------------------------------- 7

Gadani – Pakistan’s Shipbreaking Yard ------------------------------------ 7

History of Gadani Yard ---------------------------------------------------------- 8

Remembering History ----------------------------------------------------------- 9

Capacity of The Yard -------------------------------------------------------------

10

Operations at The Yard --------------------------------------------------------- 10

Benefit from Shipbreaking to Economy --------------------------------------

10-11

Products extracted from Shipbreaking -------------------------------------- 11

S.W.O.T. Analysis --------------------------------------------------------------- 12

Gadani Workers at Work ------------------------------------------------------- 13

ALUMINUM

What is Aluminum? --------------------------------------------------------------- 14

History of Aluminum ------------------------------------------------------------- 14

Generation of Aluminum -------------------------------------------------------- 14

Types of Aluminum -------------------------------------------------------------- 15

Recycling of Aluminum at Karachi ------------------------------------------ 16-17

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RECOMMENDATIONS

Recommendations -------------------------------------------------------------- 18

Reference Section -------------------------------------------------------------- 18

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PREFACE

The ship breaking and recycling industry (SBRI) converts end-of-life ships into steel and other recyclable items. Ship recycling offers the most environmentally sustainable way of disposing of old vessels, with virtually every part of the hull and machine complex being reused or recycled as scrap metal. Although the industry is beneficial from a life-cycle assessment point of view, over the years it has gravitated toward countries with low labor costs, weak regulations on occupational safety, and limited environmental enforcement. The “global shift” in the industry to countries with comparatively weaker regulatory systems is of particular concern as ships contain many hazards that can have significant detrimental effects on humans and the environment if not dealt with properly.

Currently, the global center of the ship breaking and recycling industry is located in South Asia, specifically Pakistan, Bangladesh, and India. These three countries account for 70–80 percent of the international market for ship breaking of ocean-going vessels, with China and Turkey accounting for most of the rest. Only about 5 percent of the global volume of such vessels is scrapped outside these five countries. This study focuses on the SBRI in Bangladesh and Pakistan to get a better understanding of the economics of the industry and the environmental impacts arising out of such activity and to explore possible ways in which such environmental effects may be mitigated.

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ACKNOWLEDGEMENT

In the name of ALLAH, the Most Kind and Most Merciful

First of all I am grateful to ALLAH ALMIGHTY, who bestowed me with health,

abilities and guidance to complete the report in a successful manner, and

without HIS help I was unable to perform this task.

I would like to express my gratitude to my Business Communication Teacher Mr.

Nadeem Faraz Ahmed; who gave me this opportunity to fulfill this report and his

encouragement always worked as moral and also to My Father Mr. Haider Ali

who has helped me a lot in making this report and understanding the subject.

This report is a part of our course “Business Communication”. This has proved to

be a great experience.

Thanks You

UMAIR ALI

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EXECUTIVE SUMMARY

The report assigned to us was to analyze any Product/Industry in the

Market. I decided to choose one of Pakistan’s Industry “Ship Breaking

Industry” and Metal “Aluminum”.

I have tried my best to analyze the Ship Breaking Industry in Pakistan

i.e. what is the Industry, History, The Industry in Pakistan, International

Overview, and also the list of Materials/Items extracted from the

industry. The reason behind choosing this topic is to explore the

industry to our new generation who is almost unaware of the industry.

Furthermore, I have also include information about Aluminum and it’s

recycling process.

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WHAT IS SHIP BREAKING?

Ship breaking is the process of dismantling a ship that has been retired from active use. The idea behind this process is to salvage as much of the material from the ship as possible and recycle the components in some manner. Also known as ship demolition and ship recycling, ship breaking is usually employed when the cost of repairing the ship and keeping it in active use can no longer be justified.

For most of the 20th century, the majority of the ship breaking activity in the world was carried out in Great Britain and the United States. During the final half of the century, shipyards that engaged in ship breaking began to appear in various countries around the Middle East as well as in South America. By the beginning of the 21st century, ship breaking had become a common task that is performed in many shipyards around the world.

Part of the attraction for ship breaking today has to do with the practical use of available resources. As part of the process, components that can be salvaged from the ship are removed first. This can include everything from engine parts to sleeping bunks and even bulkheads. Once the vessel is stripped of all components that can be cleaned and reused in other ships, the remainder of the hull undergoes a process of demolition that often leads to breaking down the shell and selling the pieces as scrap metal.

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HISTORY OF SHIPBREAKING

Until the late 20th century, ship breaking took place in port cities of industrialized countries such as the United Kingdom and the United States. Today, most ship breaking yards are in developing countries, with the largest yards at Gadani in Pakistan, Alang in India, Chittagong in Bangladesh and Aliağa in Turkey. This is due to lower labor costs and less stringent environmental regulations dealing with the disposal of lead paint and other toxic substances. Some "breakers" still remain in the United States which work primarily on government surplus vessels. There are also some in Dubai, United Arab Emirates for tankers. China used to be an important player in the 1990s. It is now trying to reposition itself in more environmentally friendly industries

“GADANI” – PAKISTAN’S SHIPBREAKING YARD

Gadani ship-breaking yard is the world's third largest ship breaking yard. The yard consists of 132 ship-breaking plots located across a 10 km long beachfront at Gadani, Pakistan, about 50 kilometres northwest of Karachi.

In the 1980s, Gadani was the largest ship-breaking yard in the world, with more than 30,000 direct employees. However, competition from newer facilities in Alang, India and Chittagong, Bangladesh resulted in a significant reduction in output, with Gadani, today, producing less than one fifth of the scrap it produced in the 1980s. The recent reduction in taxes on scrap metal has led to a modest resurgence of output at Gadani, which now employs around 6,000 workers.

In the 2009-2010 fiscal year, a record 107 ships, with a combined light displacement tonnage (LDT) of 852,022 tons, were broken at Gadani whereas in the previous 2008-2009 fiscal year, 86 ships, with a combined LDT of 778,598 tons, were turned into scrap.

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HISTORY OF GADANI SHIPBREAKING YARD:

Informal ship-breaking operations occurred along the Gadani coastline prior to Pakistan's independence in 1947. After independence, a group of entrepreneurs made serious efforts to develop this casual trade into a regular industry. Despite their efforts, Gadani beach at that time lacked necessary infrastructure facilities including roads, utilities or accommodation or medical services for workers.

Realizing the potential importance of the ship-breaking industry to the national economy, the Government of Pakistan announced in 1978 a number of measures including the declaration of Gadani as a port, a reduction in import duties on ships designated for breaking-up, and a government task force to address infrastructure and logistics issues.

1969 to 1983 is considered to be the golden period of the ship-breaking industry. In the 1980s, the Gadani shipbreaking industry provided employment to over 30,000 workers directly, while over half a million people earned their living indirectly, through trade and industries which used ship scrap as raw material. It was described as the largest such yard in the world.

However, increased competition from rival ship-breaking yards in Alang, India, and Chittagong, Bangladesh, coupled with relatively high import duty for decommissioned vessels, led to a disastrous decline in Gaddani's output. After producing an average of one million tonnes of scrap in the 1980s, by 2001 the yard produced less than 160,000 tonnes and for ten months had no new vessel arrivals.

In 2001, the Government of Pakistan reduced ship-breaking duties from 15% to 10% and offered further incentives if industry activity improved.. The measures have been effective, with a modest increase in employment to a total of around 6,000 workers.

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MOST REMEMBERING HISTORY OF GADANI YARD:

Pakistan’s forgotten ship-breaking industry is set for a boost as it prepares to tear up the oil tanker Captan Michalis, the largest ever ocean-going vessel to be scrapped.

The formerly Greek-owned Kapetan is poised to be broken here at Gadani, the heart of the nation’s once-thriving ship-breaking industry about 60 KMS northwest of Karachi, on the edge of the Arabian Sea.

“It is so huge that it could take a year to be completely scrapped,” says MOHAMMD ALI, a labour a checker as a top level with 29 years in the industry under his belt.

A typical tanker can be stripped in around six months, but the Kapetan Michalis — the first of the gargantuan 70s-era tankers to be scrapped

The tanker’s vital statistics — 427 meters long, 71 meters wide and 37 meters high make her almost twice the size of the infamous Titanic, and the largest ship in the world “This is the largest ship that has ever been brought here for breaking and it will be an experience for me to supervise it,” says Mohammad Uzair, another veteran of the industry.

After nearly 25 years cruising international waters under its Greek owner, she pulled up her anchor for the last time in October after she was steered here by a Pakistani ship breaker.

The scrapping of Kapetan Michalis is giving a one-off boost to the ship breaking industry here, which has been floundering since its hay days of the late 80s and early 90s.

“I still remember the days when a long queue of ships was always waiting for scrapping and almost 100,000 laborers were at work,” Uzair sighs.

Now there are no more than a few thousand men working here, earning around Rs 6,000 per month, and only five to six ships are anchored at any one time.

Once stripped, remnants of steel, motors and pipes will be sold to steel mills and other dealers. A supervisor at the yard estimates her parts will bring in over Rs 1 billion (17 million dollars).

In the 1970s the ship breaking industry was mainly concentrated in Europe, but high wages and the increasing cost of upholding environmental, health and safety standards led to Asia emerging as an

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alternative.

CAPACITY OF GADANI SHIPBREAKING YARD:

Gadani currently has an annual capacity of breaking up to 125 ships of all sizes, including supertankers, with a combined LDT of 1,000,000 tons.

Although Gadani ranks as the world's third largest ship breaking yard after Alang and Chittagong in terms of volume, it is the world's leading ship breaking yard in terms of efficiency. At Gadani, a ship with 5,000 LDT is broken within 30 to 45 days, whereas in India and Bangladesh, it takes, on average, more than six months for breaking a vessel of the same size.

OPERATIONS OF GADANI SHIPBREAKING YARD:

Ships to be broken up are run aground on the beach under their own power, then gradually dismantled. As the weight of the ship lessens, it is dragged further onto the beach until completely scrapped. In common with many other breakers in the region, scrapping ships at Gadani uses large amounts of local cheap labor with minimal mechanical assistance.

BENEFITS FROM SHIPBREAKING TO ECONOMY:

SHIPBREAKING plays an important role in the national economy for a number of reasons:

1. Production of steel: the scrapping of ships provides the country’s main source of steel and in doing so saves substantial amount of money in foreign exchange by reducing the need to import steel materials. The iron from recycled ships supplies iron materials in the country. This does mean however, that the owners have more power and control over the amount of steel that is sold and the price it is sold at.

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2. In some ways it can be considered a “green industry”. Almost everything on the ship and the ship itself is recycled, reused and resold. The scrapping of ships supplies raw materials to steel mills, steel plate re-manufacturing, asbestos re-manufacturing as well as providing furniture, paint, electrical equipment and lubricants, oil to the number of businesses that have spouted up specifically as a result.

3. It generates large amounts of revenue for various Government authorities through the payment of taxes. Every year the Government collects almost 9000 million taka in revenue from the shipbreaking industry through import duty, yards tax and other taxes.

4. Employment. Despite the conditions that the workers are employed under, this is an industry that employs more than 6,000 people directly. It provides employment for some of the poorest people from the region who would otherwise have no employment.

These mainly economic benefits have made shipbreaking a powerful industry. But these economic benefits should be considered together with the social and environmental costs. Together, with better regulation shipbreaking can also bring social and environmental benefits.

PRODUCTS EXTRACTED FROM SHIPBREAKING

Iron Scrap Steel Scrap Aluminum Scrap Motor Engines Parts of Motor Engines Hazardous Items

- Asbestos- Hydraulic Oil- Paints- Cadmium / Mercury- Radioactive Substance- Oily Rags- Batteries- Organic Rags- And; many other items

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S.W.O.T. ANALYSIS

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.

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GADANI WORKERS AT WORK:

This photo is courtesy of Mr. Raja Islam. The place is Gadani’s Ship Breaking area some 40 km west of Karachi. Ships of all sizes and shapes are broken down into small pieces of scrap here using mostly the hand tools. It is a work of sheer labor. When I first saw this picture in Raja Islam’s collection it was titled as ‘Egyptian slaves at work’. Breaking a ship into small pieces by using simple hand tools is probably very close in effort to building a Egyptian pyramid.

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Labours are busy in Pulling Heavy Machinery

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WHAT IS ALUMINUM?

Aluminum is an abundant metallic chemical element which is widely used throughout the world for a wide range of products. Many consumers interact with some form of aluminum on a daily basis, especially if they are active in the kitchen. The element has an atomic number of 13, and it is identified with the symbol Al on the periodic table of elements. It is classified in the poor metals, sharing the property of extreme malleability with metals like tin and lead.

HISTORY OF ALUMINUM

The history of aluminum is actually quite old. Various forms of the element have been used for centuries; aluminum oxides, for example, appear in pottery and glazes from Ancient Egypt. The Romans also used aluminum, in the form of a substance they called alum. In the 1800s, Hans Christian Oersted isolated an impure form of the element, and he was followed by Friedrich Wohler, who succeeded in isolating pure aluminum in 1827

GENERATION OF ALUMINUM

At first, scientists believed that aluminum was extremely rare and difficult to extract, and the metal was at one point highly prized. Several sculptures from the 1800s illustrate this commonly held belief. In 1886, however, an American student named C.M. Hall and a Frenchman named Paul Herout developed a process for smelting ores to extract their valuable aluminum. The Hall-Heroult method is now extensively used throughout the world to isolate aluminum from ores such as bauxite.

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TYPES/USES OF ALUMINUM

ALUMINUM PLATE

Most pizza plates sold today tend to be medium or large in size, but smaller types are also available. Aluminum plates are lightweight and are often available in sizes suitable for serving small pizzas.

One of the main reasons woodworkers have for replacing a router plate is that it's easier to monitor the progress of work using a clear acrylic router plate than the opaque aluminum plate. Some will also want a larger plate to increase the amount of surface area that comes in contact with the workpiece, contributing to the stability of the process and accuracy of the work, as well as the overall safety of the project.

ALUMINUM TUBE

Steel tubes tend to be heavier, but they are exceptionally strong as well. Aluminum tubes are much lighter, but they cannot support as much weight as steel tubes can.

Being more flexible than steel, copper tubing is more easily adjusted and manipulated in small spaces and around corners. Aluminum tubing is great for making bicycle frames, and both brass and aluminum tubing are commonly used in the building of models.

ALUMINUM ALLOYS

Silicon, an aluminum alloy, is used to manufacture semiconductor materials. Copper, another aluminum alloy, is used for a wide variety of purposes from shipbuilding to roofing.

ALUMINUM SHEET

Thicker aluminum sheet will normally require the use of a CO2 laser, which is more powerful than the neodymium-class lasers. Laser cutting aluminum can be accomplished by either moving the aluminum sheet beneath the optical cutting head, or by moving the optical head over a stationary sheet of aluminum.

ALUMINUM CIRCLES

Many of the satellites circling the Earth are protected from space debris by layers of anodized aluminum. The automobile industry relies heavily on anodized aluminum for trims and protective housings for exposed parts.

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RECYCLING OF ALUMINUM AT KARACHI

Aluminum Scrap which gather from Shipbreaking at Gadani Yard has been recycled at many small industries most of them are situated at Shershah, Karachi. These industries melt the scrap aluminum and give them new shape.

I have visited Shershah for gathering information about recycling process and there I have mean one of the big recycler of Aluminum at Shershah i.e. Mr. Pervaiz Ali. His industry is working with recycling of 200 to 2000-KGS periodically.

Followings are the some pictures and information gather from Mr. Pervaiz’s recycling factory situated at Shershah, Karachi.

1ST STEP is loading of Scrap Aluminum in Furnace (Bhatti in Urdu) and heated to 750 °C ± 100 °C to produce molten aluminum. (as shown in picture 1.1 – 1.2)

(Picture 1.1) (Picture 1.2)

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2ND STEP is blending of Molten Aluminum, as shown in picture 1.3.

(Picture 1.3)

In 3RD STEP the furnace is tapped, the molten aluminium poured out, and the process is repeated again for the next batch. Depending on the end product it may be cast into ingots, billets, or rods. The most demanding finished aluminum in Karachi is ingots. Therefore, generally recycler give them ingot shape. It can be billets or rods etc as per requirement of customer. (This step is shown in picture 1.4 and also Finished Aluminum Ingot is shown in picture 1.5)

(Picture 1.4) (Picture 1.5)

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RECOMMENDATIONS

More Investment in needed in Pakistan to achieve an adequate institutional capacity, to provide ground-level protection for SBRI (Shipbreaking and Recycling Industry) workers, and to enforce environmental regulations. Although the SBRI industry is situated in a relatively unpopulated area, infrastructure improvements are needed in the capacity and safety of the main road for transport of all waste and reusable materials generated in the ship recycling yards.

Significant infrastructure and capacity development in the hazardous waste management sector is required in particular in the long term in order to achieve proper storage and disposal levels leading to compliance with national regulations, the Hong Kong Convention, and other relevant international agreements. Investments in hazardous waste management and waste disposal may present opportunities for engaging in public-private partnerships to the benefit of the local urban area of Hub, the greater urban zone of Karachi, the Port of Karachi, and the ship breaking and recycling industry.

References:

WikiPedia (http://www.wikipedia.com)Alibaba (http://www.alibaba.com)Report on Shipbreaking and Recycling Industry on Pakistan – 2010 (By World Bank)

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