Govt moves to formalize ship recycling sector, boost steel scrap manufacturing

ISLAMABAD: The federal government is likely to formally declare the ship recycling sector as an “industry” in a move aimed at boosting local production of re-rollable and re-meltable scrap, and to comply with international standards outlined in the Hong Kong Convention. Newzshewz has reliably learnt.
According to sources in the Ministry of Maritime Affairs (MoMA), the ship recycling facility at Gaddani, Balochistan—currently the third-largest in the world—has been operating largely in the informal sector, without official recognition as an industry at the federal level. However, the Balochistan Development Authority has already acknowledged it as an “industry” under the Balochistan Development Authority Act, 1974.
Sources further stated that the Federal Board of Revenue (FBR), acting on recommendations from the Engineering Development Board (EDB), notified Customs General Order No. 04/2022, listing locally manufactured goods that qualify for duty and tax exemptions under various concessionary regimes/SROs, excluding items not produced domestically.
The Pakistan Ship Breakers Association (PSBA) is currently the only domestic entity engaged in the production of re-rollable and re-meltable scrap through ship recycling. This process supports direct employment for 20,000 to 25,000 skilled and unskilled workers at Gaddani, with an additional 500,000 individuals employed across downstream industries.
Re-rollable scrap serves as a key raw material for the re-rolling sector, which manufactures construction bars. Due to its mild steel composition and high strength, re-rollable scrap is also a vital input for hundreds of small-scale steel industries, primarily in Punjab, that produce tools, hardware, and agricultural implements. Meanwhile, re-meltable scrap (HMS I & II) is used by steel melting furnaces and large steel manufacturers to produce ingots, billets, and rebars.
Pakistan officially acceded to the International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (Hong Kong Convention) in November 2023. The convention aims to ensure that ship recycling processes do not pose undue risks to human health, worker safety, or the environment. The convention’s provisions, which will come into effect on June 26, 2025, require the establishment of safe and environmentally sound facilities and measures for the disposal of hazardous materials.
In line with these obligations, the Ministry of Maritime Affairs formally requested the Ministry of Industries and Production to begin the process of declaring the ship recycling sector as an official industry. In response, the Ministry of Industries and Production noted that a defined process exists to determine which sectors qualify for industry status. As per past precedent, such proposals are submitted by the relevant ministry to the Economic Coordination Committee (ECC) of the Cabinet for approval, after which the Ministry of Industries issues the official notification.
A summary seeking ECC approval was submitted to the Federal Cabinet on March 26, 2025, but the Cabinet recommended seeking the input of relevant stakeholders before proceeding. Accordingly, the summary was circulated to the Ministries of Commerce, Finance, and the Federal Board of Revenue (FBR). All three entities have now submitted their views and expressed support for declaring the ship recycling/breaking sector as an industry.
Following this consultation, the Ministry of Maritime Affairs has reiterated its proposal to formally grant the sector “industry” status—both to support local production of key steel materials and to ensure timely compliance with the Hong Kong Convention. The Ministry of Industries and Production is expected to issue the official notification accordingly. Ends