RIO 1.

pages: O g
SVKM's NMIMS
School of Business Management

Breaking Bad: Case of Alang Beaching l

The Problem

Shipbreaking is a heavy and hazardous industry that exposes workers and the environment to
many risks. Compared to sinking or abandonment, ship recycling is considered the most
environmentally friendly and economically sound way of getting rid of old ships, as it
ensures the reuse of valuable resources such as steel, iron, aluminum, machinery, plastics and
anything else of value that can be removed.Till the 1970s, ships were dismantled mainly in
Europe and the United States. When social and environmental protection laws became
stricter, the industry shifted to areas where legal frameworks were weaker. As higher prices
are available for end-oflife vessels in jurisdictions with lower environmental and health and
safety regulations 70 % of global shipowners prefer to scrap their ships on the beaches of
Alang-Sosiya (India), Chattogram alias Chittagong (Bangladesh), and Gadani (Pakistan) by
'beaching2' (The problem, 2020). The human costs and the environmental impacts of
beaching are devastating. The negative consequences of the shipbreaking industry impact
ecosystems and human life. Workers lose their lives and suffer injuries and occupational
diseases due to unsafe working conditions and exposure to toxic substances. The coastal
ecosystems and the local communities depending on them are devastated by toxic spills and
other types of pollution (Where ships go to die, (n.d). The International and regional legal
instruments like 'The Basel Convention on the Control of
Transboundary Movements of Hazardous Wastes and their Disposal (1989) 3 , The Hong
Kong International Convention (HKC) for the safe and environmentally sound recycling of
ships (2009)45, The EU Waste Shipment Regulations and The EU Ship Recycling Regulation
(2013).6have aimed at regulating the transboundary movement and the management of

1 Meena Galliara, Director, Jasani Centre for Social Entreprenuership & Social Entreprenuership, SBM NMIMS (
Working Paper)
2 Beaching means bringing out a ship from deep water onto the shore with a purpose of breaking;
3 The Basel Convention, which entered into force in 1992, regulates the international trade of hazardous wastes
and is relevant for ship dismantling as a ship usually contains hazardous materials in its structure. The Basel
Convention also published "Technical Guidelines for the Environmentally Sound Management of the Full and
Partial Dismantling of End-of-life-ships" in 2002.
4 The Hong Kong Convention address all the issues around ship recycling, including the fact that ships sold for
scrapping may contain environmentally hazardous substances such as asbestos, heavy metals, hydrocarbons,
ozonedepleting materials, and others. It also addresses concerns raised about the working and environmental
conditions at many of the world's ship recycling locations.
5 Under EU waste shipment law (2006), shipments of hazardous waste and waste destined for disposal are prohibited
to non-OECD countries outside the EU.
6 The European Union Ship Recycling Regulation entered into force on 30 December 2013. Most of its
provisions are applicable as of 31 December 2018. The Regulation sets requirements for ship recycling
activities, and includes environmental protection and occupational health and safety standards that go beyond
the Hong Kong Convention.

ile
hazardous wastes. But, it remains far too easy for ship owners to circumvent these laws
("Responsible ship recycling, " 2022).

The ship recycling regulatory landscape is complex. It may affect not only the ship-owning
company but also shipyards, brokers, insurance companies, banks, and many other entities
involved in the transaction chain with serious criminal, commercial, and damaging reputational
consequences for failure to comply.

About Alang Shipyard

Alang in Bhavnagar (Gujarat) is the world's biggest shipbreaking yard. Nearly half of the
World's ships' life ends and is recycled on the Alang-Sosiya beach (Editor, 2018). Ships are
anchored in various states of dismemberment. As you approach the shipyard, rows of shops dot
the roadside. Stacks of wash basins, toilet fittings, big and small commercial refrigerators, Steel
pipes, faded anchor ropes, rusted iron chains, used cables, etc., lie in heaps and are sold by
weight (Malini, 2016). The Alang Shipyard's recycling industry has a turnover of INR 6000
crore and contributes about INR 2000 crores as taxes to the Government (Kumar 2021).

In this overwhelmingly male town — over 80% of the population is men, mostly migrant
workers from UP, Bihar, and Jharkhand stay in pathetic conditions. Fire explosions and
accidents are reported to be common, leading to workers' deaths and deformities. The shipyard
weighs heavily on the conscience of global shippers. Alang has 170 ship-breaking yards, of
which about 135 plots are operational (Sahu, 2018). Ninety-two have received Statements of
Compliance from the Hong Kong Convention (HKC)7 (Kumar 2021). According to Gupta
(2019), the standards set by the HKC ignore critical issues such as labour rights and
downstream waste management, which puts 25,000- 30,000 workers' lives at risk, posing a
threat to the environment. India has loose marine environmental protection policies, leading to
irreversible harm to the surrounding flora and fauna. "Several beautiful coral reefs near the
Indian coasts have been destroyed, and the marine life in the affected area has gone haywire"
(Raunek 2021). Fishing was once the most important business in Alang, but nets have grown
empty since shipbreaking took over in the 1980s. "In the last 20 years, the size of the catch has
gone down. Alang has now become an official storage facility for toxic wastes, radioactive
elements, poisonous gases, and waste, unusable oil. Dinesh Gulab Bivagar, a community leader
from Ghogha, a small town a few miles north of the shipyards (cited in Raunek (2021)) shares,
"The toxic waste has not only entered into the marine food chain by contaminating the oceans
but also have greatly affected the health of workers, who already live in a dilapidated condition
with least safety measures and poor health care facilities." Due to high levels of contamination
caused by toxic elements( mercury, cadmium, and asbestos), workers and other residents are
reported to suffer from respiratory, heart, and neurological disorders (Kavita, 2021).

7 The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (the
Ship Recycling Convention or the Hong Kong Convention) was adopted in May 2009. As per the Convention, the
development and maintenance of an Inventory of Hazardous Materials, which identifies the amount and location of
hazardous materials onboard a ship, will be required for all ships over 500GT. Ships shall only be recycled at ship
recycling facilities authorized by the competent authority. India did not ratify the code immediately. In 2013, stirred
into action by the Supreme Court, the government announced a ship recycling code with strict norms.
Sahu (2014) states, "Highly unregulated workers are regularly exposed to ill-treatment and
social and economic abuses. Being uneducated, they fall prey to caste, religion, gender, and
region dynamics of the group. Most workers have no means to contact their families, so they
live turbulent lives without any support or guidance. Further, the workers do not get benefits
under government schemes such as provident funds or minimum wages as they are employed in
the informal/unorganized sector". "International Federation of Human Rights, in its report,
highlighted that the Indian government is violating the International Covenant on Economic,
Social and Cultural Rights by failing to ensure minimum essential rights to the ship workers in
Alang such as right to favourable conditions for work, right of everyone to form trade unions,
etc." (Gupta, 2019).

Not So Safe and Green

Goyal (2016) shares, "Mukesh Kumar (name changed), 45, came to Alang in the late 1980s
from Uttar Pradesh. He recalls that many in his village were flocking to Alang, desperate for
work. He started as a helper at Rs 22 for an eight-hour shift. In pre-liberalized India was
struggling on multiple fronts. Few entrepreneurs nor the Government are worried about safety,
the environment, or pollution. Working bare hands and feet and with no safety gear, workers
like Kumar handled hazardous materials like asbestos. "I have seen many people die in front of
my eyes from accidents and gas explosions," says Kumar. Often worker deaths would go
unreported or under-reported. Records of dead workers would disappear overnight with no trail
left, shares Kumar." According to the NGO Shipbreaking Platform 8, at least 137 lost their lives
between 2009 and 2019. The organization believes that number is probably only the tip of the
iceberg because shipyard owners refuse to discuss accidents. More than half of shipyard
workers say they have been injured on the job, according to Sahu (2019).

Today, Kumar, a father of three, earns about INR 360 daily as a gas cutter on an eight-hour
shift. (Goyal 2016). But, wealthy shipping companies, shipbrokers, and shipyard owners make
millions by selling and breaking ships. The ship workers live in rented shanty dwellings
without basic facilities such as potable water, sanitation, electricity, drainage systems, and
education for their children. Lack of drinking water is a significant concern for the migrant
workers, who are forced to spend their meager income on buying water from local village
people. The WASH9 facilities created by the Gujarat Maritime Board (GMB) for 35,000
workers are grossly inadequate. The study conducted by Sahu (2014), cited by Gupta (2019),
states GMB had set up only six toilets and 12 stand-post bathrooms for 35,000 workers. The
TISS report (2019) confirms that not much has changed since then regarding the WASH
facilities at Alang.

Shifting Dynamics

To chase economies of scale, ship owners like Maersk built mega container ships to increase
their capacities to ship more goods. Today, about 7.5% of container ships are reportedly idling,
and global freight rates have dropped (Goyal 2016). This has impacted the profitability of the
shipping business. For instance, Hanjin Shipping, which was ranked as the number one ocean

8 A global coalition of organisations working to reverse the environmental harm and human rights abuses caused
by current shipbreaking practices. 9 Water, Sanitation & Hygiene
carrier in South Korea, went bankrupt in February 2017 (Kim, 2022). Maersk has overhauled
its business by splitting its logistics and oil verticals to maintain its profitability and efficiency.

In a tight business climate, ship owners like Maersk send more vessels to scrapyards.
That's where Alang fits in. So far, Alang was off its radar due to substandard yards. In April
2016, Maersk sent its first two ships to the yard owned by the Shree Ram Group at Alang
(Nayar 2016). According to Goyal (2016), the MNC has estimated to save anywhere between
$1.5 million and $2 million per vessel by scrapping its ships in India rather than in yards in
countries like Turkey and China.

Armed with global certifications, like HKC, Shree Ram Group has been upgrading one yard
under the close supervision of Maersk. Some changes include impermeable concrete floorings
in the inter-tidal zone of the yard and upgraded dorms for workers, mandatory provident fund
deductions, and 200% payment for overtime and PPE kits (boiler suits, safety gears, helmets,
and full face masks) for gas cutters. Better compliance has helped Shree Ram Group get vessels
at a 10-15% discounted rate (Goyal 2016). Work to upgrade other yards owned by the company
is in the pipeline.

Though Shree Ram Group claims to follow safety standards, Danwatch, a Danish investigative
journalism center's report in 2016, highlights unsafe practices by the Shree Ram Group.
Nordahl et al. (2016) 's inspection report and accompanying photos suggest that the Shree Ram
Group does not meet international safety standards. Mr. Chetan Patel, Director of Shree Ram
Group, in response to Danwatch's allegation, stated that it safeguards workers' rights (Business
& Human Rights Resource Centre, 2016). Annette Stube, Maersk Group's head of
sustainability, told Danwatch, "We agree that the photos show that our requirements are not
being met. We want to play a role in ensuring that responsible recycling becomes a reality in
Alang. To find sustainable solutions, we are building a broader coalition with other ship owners
and have initiated engagement with several carefully selected yards in Alang. This includes
improving local waste facilities and hospitals — and upgrading the housing conditions for the
migrant workers in Alang" ( Nordahl, 2016).

Chaplin (2015) & Sahu (2019) feel that for most ship breakers at Alang, a less rigorous
approach towards safety and environmental control appears to be the norm. They still need
persuading to adopt sustainable practices. Unfortunately, ship owners do not want to assist
financially in upgrading the yards sacrificing some of the residual value of their vessels to
ensure Alang's longterm survival. International ship liners themselves flaunt international
regulations designed to protect the environment and people in countries where ships are
scrapped and recycled.
But, Haresh Parmar, joint secretary of the Ship Recycling Industries Association (SRIA),
believes that in days ahead, many shipyard owners will follow national guidelines and adopt
international certification and sustainability standards for inclusion in the EU's list of
approved yards for shipbreaking. Additionally, international organizations like 'The NGO
Shipbreaking Platform' and local NGOs- 'Paryavaran Mitra' and 'Machimar Adhikar Sangarsh
Sanstha are acting as pressure groups to showcase the unsafe practices adopted by shipowners
and shipyard owners at Alang. If we want good business, we must adopt international safety
practices. The EU-owned or flagged vessels comprise almost 40% of the world's fleet by value.
To get business shipyard owners are also going for multiple ISO certifications from global
agencies like Class NK IO, IRI I Class, Llyod's Register, Bureau Veritas, and RINA 12, says
Komalkant Sharma,

10
Nippon Kaiji Kyokai
CMD, Leela Group of Companies, and one of the largest ship-breakers at Alang (Kumar 2021).
According to Parmar and Sharma, shipowners from the EU and other developed countries also
need to handhold the shipyard owners and others in the value chain to develop responsible
scraping and recycling practices. This will avoid protests/ litigations and subsequent financial
and reputational damage.

With global ship recycling volumes predicted to double by 2028 and quadruple by 2033, urgent
action is needed to ensure that suppliers meet the growth in demand for ship recycling services
with responsible practices (Responsible recycling(n.d). A slew of global-local factors is shifting
business dynamics to improve how Alang breaks its ships and treats its workers.

Role of Government

Following legal actions taken by NGOs, the Indian Supreme Court directed the industry to align itself
with national and international labour and environmental laws. The Government reacted by adopting the
Ship Recycling Code only in 2013. Goyal (2016) states the Gujarat Maritime Board (GMB) has helped
in setting up the Gujarat Eco-Textile Park (GETP). The facility manages a 17acre waste park where
hazardous and other wastes (glass, wool, and asbestos) from shipyards are recycled, disposed or stored
securely. The facility has handled 45,000 tonnes of waste so far. GMB's Safety Training and Welfare
Institute provides basic training and has trained more than a lakh workers over ten years. However, Sahu
(2019) argues that despite a number of initiatives taken by the Gujarat Maritime Board (GMB) is not
able to monitor or provide adequate facilities and infrastructure in the shipbreaking yards. The presence
of multiple government agencies has not made a significant impact in controlling the behavior of
shipbreaking industries to ensure better working conditions. The report funher highlights that the
implementation of labour laws and various Government appointed committee recommendations have
not been effectively implemented and taken seriously by different state government departments in
Gujarat.

Basic safety and worker benefit rules are often flouted at Alang. "60 % of workers still do not
have a provident fund account despite it being mandatory. By law, workers must get double the
wage for overtime hours, but many are not getting it. Workers are paid in cash daily-wage with
virtually no employment contract. Even on safety, some yard owners are taking shortcuts.
"When there is checking, they dress up the yard to prove compliance. My mask is of poor
quality, and I do not have a mandatory boiler suit," says a worker. Accident-prone Alang needs
a good hospital as well" (Gupta 2019). Over the years, a study by the Indian National Human
Rights Commissioned and media reports have exposed breaches of labour rights, disregard for
labour laws and safety standards ( Costa & Sahu, 2020). In 2019 the National Green Tribunal
directed the Ministry of Environment, Forest and Climate Change to undertake an
environmental audit of the shipbreaking activities in Alang with a specific focus on the impacts
of the beaching method.
The Union Ministry of Shipping in 2020 has decided to develop Alang as an eco-friendly
shipyard, enabling it even to dismantle warships. According to the Ministry, warships entail a
huge business opportunity for India due to the non-availability of warship dismantling facilities
across the world (Indo-Asian News Service, 2018). An eco-friendly shipyard poses a peculiar

Il
Indian Register of Shipping
12
Registro Italiano Navale Autoridad
challenge because Indian shipyards are attractive as demolition grounds because they are
cheap and less regulated (Gupta 2019). Reforming them could divert business to Bangladesh
and Pakistan. Will the Indian Government prioritize profit over workers' health?

References

Business & Human Rights Resource Centre. (October 21, 2016). Business & Human Rights
Resource Centre invited Shree Ram Group to respond to the concerns raised in the following
Danwatch report and article. Retrieved February 1 0, 2023.
https://media.businesshumanrights.org/media/documents/files/documents/SRG Response_to
Shipbreakingyard_Alang
31 oct 2016.pdf

Chaplin Joe. ( December 10, 2015). A clear line has been drawn in the Alang sand. Retrieved
February 10, 2023, https://www.linkedin.com/pulse/clear-line-has-been-drawn-alang-sand-
jonchaplin/

Costa S & Sahu G. ( August 3, 2020). The Ship Recycling Industry Must Move Towards a
Sustainable Future. Retrieved February 1 0, 2023,
https://thewire.in/environment/shipbreakingship-recycling-industry-sustainable-future-
environment

Editor, 360. (2018, September 5). Reimaging Alang ship recycling -. Stee1360. Retrieved
February 10, 2023, from https://www.steel-360.com/stories/recycling/reimaging-alang-
shiprecycling-2

Editor, Mfame. (2021 , July 26). Ship recycling, a changing landscape. mfame. guru. Retrieved
February 10, 2023, from https://mfame.guru/ship-recycling-a-changinglandscape/#:
—:text=When%20compared%20to%20sinking%200r,%2C%20iron%2C%20alumini um
%20and%20plastics.

Goyal Malini (Oct 23, 2016).At Alang shipbreakingyard, worker safety remains a Dusty
Dream. The Economic Times. (n.d.). 'Retrieved February 10, 2023, from
https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/at-
alangshipbreaking-yard-worker-safety-remains-a-dusty-dream/afticleshow/55002097.cms

Gupta, R. (2019, September 17). Breaking a ship at Alang can be toxic, shows Dutch docu.
Down To Earth. Retrieved February 10, 2023, from
https://www.downtoearth.org.in/news/pollution/breaking-a-ship-at-alang-can-be-toxic-
showsdutch-docu-66768

Indo Asian News Service (2018, October 12). Asia's largest ship-breaking yard at Gujarat
to soon dismantle warships. NDTV.com. Retrieved February 10, 2023, from
https://www.ndtv.com/india-news/alang-asias-largest-ship-breaking-yard-at-gujarat-to-
soondismantle-warships- 1931329

ILO.org (n.d). Ship-breaking: a hazardous work, Retrieved February 10, 2023,

https://www.ilo.org/safeworWareasofwork/hazardous-work/WCMS 110335/1ang--en/index.htm

Jayakumar, P. B. (2021, May 13). Clean and Green Alang. Business Today. Retrieved
February 10, 2023, from https://www.businesstoday.in/zero-carbon-challenge/story/clean-and-
greenalang-295650-2021-05-12

Kavita. ( March 8, 2021). Alang Ship Breaking Yard Needs Overhaul. Delhi Greens.com. Retrieved
February 10, 2023, https://delhigreens.com/2021/03/08/alang-ship-breaking-yardneeds-overhaul/

Kim Hyun. (June 14, 2022). Thefall ofHanjin Shipping in South Korea — afterfive years
Retrieved February 8, 2023, from https://www.ibanet.org/hanjin-shipping-south in
%20Shipping%2C%20at%20the%20time,was%20a%20Chapter%2011 %2
Oreorganisation.

Nair Avinash. (May 14, 2016). Maersk to sendfirst two shipsfor recycling at Alang this month.
Retrieved February 10, 2023, https://indianexpress.com/article/india/india-news-india/maersk-tosend-
first-two-ships-for-recycling-at-alang-this-month-2798723/

Nordahl C, Louise M. Møller S, Dieckmann S. Madhavan P & Schaufuss M. (Oct 13,2016).

Maersk and the hazardous waste. Retrieved February 1 0, 2023.
https://old.danwatch.dk/en/undersogelse/maersk-and-the-hazardous-waste/

Raunek. (March 1 1, 2021). Alang, Gujarat: The World's Biggest Ship Breaking Yard & A
Dangerous Environmental Time Bomb.Marine Insight.com. Retrieved February 10, 2023,
https://www.marineinsight.com/environment/alang-gujarat-the-world%E2%80%99s-biggestship-
breaking-yard-a-dangerous-environmental-time-bomb/

Responsible ship recycling. Maersk. (n.d.). Retrieved February 13, 2023, from
https://www.maersk.com/sustainability/our-esg-priorities/responsible-ship-recycling

Responsible ship recycling: Criminal consequences for those who fail to comply. Penningtons
Manches Cooper. (18 August, 2022). Retrieved February 13, 2023, from
https://www.penningtonslaw.com/news-publications/latest-news/2022/responsible-shiprecycling-
criminal-consequences-for-those-who-fail-to-comply

Rubaiyat, A. (2022, June 6). South Asia's hazardous ship recycling industry must transition to
a more sustainablefuture. Scroll.in. Retrieved February 10, 2023, from https
://scroll.in/article/1025094/south-asias-hazardous-ship-recycling-industry-must-transitionto-a-
more-sustainable-future
Sahu G.(2019). Working, Living, Occupational Health and Safety Conditions of Workers In Ship
Breaking Yards in Alang-Sosiya, Gujarat, India. Retrieved on February 8, 2023, from https
://www.shipbreakingplatform.org/wp-content/uploads/2019/12/Policy-Brief-TIS S-WorkingConditions-
AS SB Y-2019.pdf

SAHU, G. (2014). Workers of Alang-Sosiya: A Survey of Working Conditions in a Ship-Breaking Yard,

19832013. Economic andPolitical Weekly, 49(50), 52-59. Retrieved February 10, 2023,
http://www.jstor.org/stable/24481178

The problem (February 10, 2020). NGO Shipbreaking Platform. Retrieved February 10, 2023,
from https://shipbreakingplatform.org/our-work/theproblem/#:—:text=More%20than
%2070%20percent%200f,practice%20known%20as%20'beachi ng'.

Where ships go to die (n.d). Konstantin Novakovié. Retrieved February 10, 2023, from
http://www.konstantinnovakovic.com/where-ships-go-to-die/