Ship Recycling is not new to India for we know of this activity ever since 1912 in Kolkata and Mumbai. The ship recycling activity in those days was a part of the larger colonial economy like plantations and mining. Steel scrap was worthwhile even then and countries that had yards to recycle ships were often considered to be economically fortunate. Indeed, ship recycling became very important at the end of the two World Wars, especially after the World War II. Further, after the oil boom in the Middle East, oil became a much transported commodity and large oil tankers added to the fleet. Refrigeration techniques that grew around the early 1950’s, too led to the emergence of the large refrigeration vessels. All of these started to age by the middle of 1970’s and the ship recycling activity reached new heights in the Western countries. When the first economic recession came around 1984 and the fleet owners thought that it was better to scrap ships than to maintain them, there was a huge backlog of ships to be demolished. With the recession on, labour appeared to be far too costly and steel scrap yielding far less prices, ships had to look for cheaper labour elsewhere. India, stepped in at this juncture.
India did not take the activities directly from the West. The first round of relocation of this industry took place in Taiwan and Korea – the countries that were fast industrializing, had a high demand path for steel and labour was cheaper. With economic growth in these countries having stabilized and wages and standards of living rising, the ship recycling activity passed on to the next level of developing countries of the Indian subcontinent, China and Vietnam, the laggard among the south east Asian Tigers. When ship recycling came to India it was a part of the industrial relocation that started around the middle of the 1980’s when the low-skilled and low-wage jobs shifted to the Third World countries. Indeed, the coming of the ship recycling activity to India was a part of globalization, as we know it today.
One of the reasons why the ship recycling activity became a boon for India was that, the middle of 1980’s was a time of the rise of electric arc furnace and a rise in demand for steel melting scrap. The re-rolling mills were already facing an expansion around the middle of 1970’s and they now grew up very fast in North and West India. The re-rolling mills were driven mainly by the boom in the construction sector in these parts that emerged as a result of rapid urbanization. Ship recycling became a source of steel scrap, whether for melting or directly re-rollable material in the re-rolling mills. In terms of price, ship-breaking scrap historically is more expensive than scrap from railways or other melting scrap, but it is cheaper than ingots from the electric arc furnaces and the billets and the semis from the integrated steel plants. Hence, ship-recycling scrap conventionally has proved to be a direct competitor of the integrated steel mills in their market for semis.
Due to increase in trend of import of ships for breaking in India, an emphasis was laid to examine various sites suitable for this activity. Considering the favorable parameters for beaching method like high tidal range, firm seabed, gentle seaward slope etc., it was decided to set-up a ship breaking yard on the western coast of Gulf of Cambay near Alang village.
Hence ship recycling in its new avatar in India found a perfect host in Gujarat’s Alang. The first vessel – MV KOTA TENJONG was beached at Alang on 13th Feb, 1983. Since then, the yard has witnessed spectacular growth and has emerged as a leading ship Breaking Yard in the world.