Currently, Bangladesh is producing an impressive 6 million tonnes of steel rods every year. The key raw materials for this come from the ship-breaking industry, which plays a significant role in boosting the country’s steel sector.
Most ships consist of around 95% mild steel, 2% stainless steel, and 3% mixed metals. These materials are crucial for various industries. A large portion of the materials needed for construction steel rods comes from the ship-breaking sector.
The Bangladesh Ship Breakers and Recyclers Association, representing shipbreaking yards, has 151 registered yards and 60 parent companies. As of July 2021, around 30-35 ship-breaking yards were operational.
Over the years, from FY2001-02 to FY2020-21, Chattogram shipyards brought in 3,329 scrap ships, contributing over 376 million tonnes of processed scrap to Bangladesh.
The world’s largest ship-breaking industry is situated along Chattogram’s north coast, covering about 11 km. These yards dismantle old, damaged, and irreparable cargo ships and oil tankers. Roughly 25% of the world’s scrap ships are taken apart here.
The roots of this industry trace back to the 1980s when it started growing due to lower labor costs and rising demand for iron in Bangladesh.
The industry’s beginnings can be linked to a ship stranded during a 1960 cyclone. Chattogram Steel House acquired and dismantled it, marking the start of ship-breaking. Commercial ship-breaking took off later, especially after the 1971 war of independence.
Throughout the 1980s, shipbreaking slowly advanced, gaining momentum in the 1990s as entrepreneurs saw profit potential. With ample low-cost labor and a growing need for steel, the industry thrived and became a vital part of the economy.
Around 30 industrialist families control Chattogram’s shipyards. The government proposed a new pay structure for shipyard workers, though implementation has been delayed. Affordable labor has played a big role in the industry’s growth.
Consumer goods traders joined the shipbreaking industry in the late 1990s, leading to the construction of over 160 shipyards in Chattogram’s Sitakunda-Mirsarai area. However, many closed after 2010 due to high interest rates and international competition.
Around 30-35 shipyards currently operate in the region. Some work as subcontractors, and some big bank loan defaulters are also involved.
Bangladesh’s government is guiding shipyards through a modernization process for environmental safety and worker protection. They’re aiming to make all shipyards green by 2023. PHP Group’s shipyard has already achieved green status.
Despite Bangladesh’s prominence in the shipbreaking sector, concerns about environmental impact persist. Converting regular yards to green ones requires substantial investment, which most yard owners can’t manage alone. Stakeholders propose government incentives and bank loans to support this transformation.
The shipbreaking industry is known for pollution and worker hazards. Many developed countries phased out this industry due to environmental and health risks. However, less developed countries like Bangladesh, India, and Pakistan have seen an increase in shipbreaking activity.
Since the 1980s, Bangladesh imported over 2.5 million tonnes of scrap ships, accounting for about 47.2% of the international recycling market.