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.
More than one million tons of steel is salvaged per year, and much of it is sold domestically. 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.
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 to break a vessel of the same size.
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.
Scrapping ships at Gadani uses large amounts of cheap, local labor with minimal mechanical assistance. Workers may earn as little as $12 a day, and are exposed to many dangers.
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 more than 30,000 workers directly, while more than half a million people earned their living indirectly, through trade and industries that 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 Gadani'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.
On 1 November 2016, at least 14 people were killed and 59 burned as a result of gas cylinder explosions on a ship being scrapped, the floating production storage and offloading oil tanker Aces (IMO number: 8021830, built 1982 as Mobil Flinders), causing a huge fire. Reportedly above 100 people were dismantling a tanker in the yard. Some 30 other workers were also reported missing. By November 2, 19 people were reported dead and the tanker was still on fire.