The metal scrapping business is so lucrative it supplies some 1.5 million tonnes of the country's steel consumption of five million tonnes, said the World Bank study Photograph: © Gallo/Getty

The lawyers are blaming state regulators - including the Department of Environment and the Ministries of Shipping and Labour - for failing to protect coastal ecosystems and to monitor these companies' compliance with safety precautions.

"We still have evidence of unsafe and unprotected handling and dismantling of ships at the Shitakunda beaches in Chittagong," said Syeda Rizwana Hasan, executive director of Bangladesh Environmental Lawyers Association (BELA). "This is taking place in clear violation of the March 2009 court order."

The order required ships to be decontaminated at source before being imported for scrapping, and that companies establish proper facilities for handling scrap metals and toxic material.

Ship breaking - the business of dismantling old vessels and recycling and selling the parts as scrap metal - has been around for decades and, according to a 2010 World Bank study, "offers the most environmentally sustainable way of disposing of old vessels".

But the same study also noted that the industry's "hazardous waste and associated occupational health hazards pose a significant national and global concern".

Bangladesh tops the list of countries having the greatest number of ships scrapped every year, with India and Pakistan trailing far behind. Some 200 Bangladeshi companies pay a combined $100 million in taxes each year. The metal scrapping business is so lucrative it supplies about 1.5 million tonnes out of the nation's total steel consumption of about five million tonnes, the World Bank study said.

Most of the ship breaking companies are located on a roughly 20km stretch of beach in Chittagong district, situated on the Bay of Bengal in southeastern Bangladesh. Some 18,000 unskilled and unprotected workers manually handle poisonous chemicals and are also exposed to the risk of explosion.

Between 2005 and 2007, a total of 270 ocean-going vessels, categorised as end-of-life-ships, were dismantled there. This year alone, some 70 such vessels have been cleared for scrapping, a majority of which failed to obtain either prior clearance to use the yards or no-objection certificates to continue scrapping operations.

On June 1, the US Maritime Administration cleared the cargo vessel Harriette for scrapping on the beaches of Chittagong, with support from the US Environmental Protection Agency.

Earlier, the ship Probo Koala, which figured in a controversial toxic waste dumping off the Ivory Coast in August 2006, was also sold for scrapping and docked on the ship breaking beaches of Chittagong. The ship has since been renamed the Gulf Jash.

The soil and waters in ship breaking areas are showing high levels of toxicity, with environmental protection limited and virtually no proper management of deadly chemicals - among them asbestos, polychlorinated biphenyls (PCBs), and other ozone-depleting substances (ODS) and heavy metals. According to the World Bank report, soil contamination tests showed concentrations of cadmium, chromium, lead, mercury and oil.

The same report predicts the accumulation of substantial amounts of poisonous chemicals including asbestos, PCBs, ODS (mainly polyurethane foam) and paints during the next 20 years if safety measures are not put in place immediately.

According to an investigation conducted by the Department of Explosives, Greenpeace, the International Federation of Human Rights Leagues, and BELA, 123 workers have died while dismantling ships on the beaches of Shitakunda in Chittagong from 1998 to March this year.

"The figures are those which are actually reported. We have no knowledge on workers whose bodies are simply thrown into the sea. So, we assume deaths could be much higher," said Taslima Islam, senior lawyer at BELA.

Since 1998, a total of 72 incidents of violent explosions and chemical spillage have taken place in ship breaking yards. Hundreds of workers who have survived with chemical burns and life-long physical disabilities have never been compensated properly, the lawyers said.

On top of this, vast areas of mangrove trees - the lifeline of the local ecosystem - have been cleared to accommodate dismantling operations.

To regulate the ship breaking industry and protect the environment, BELA sought intervention from the judiciary. In the March 2009 ruling, the court directed the decontamination at source of all ships being imported for scrapping, and for companies to set up facilities to handle scrap metals, toxic paints, and waste materials, and to manage oil spillage.

The court also directed that all workers be trained on safety measures. It ordered the companies to set up facilities like hospitals, provide emergency equipment, and form a committee to ensure implementation.

But the high level committee never functioned, and there have been allegations it was influenced by the Bangladesh Ship Breakers Association (BSBA), which controls half of Bangladesh's steel market.

BSBA president Hefazutur Rahman denied allegations that ships were being imported without proper clearance from concerned authorities.

"Ship breaking operations are taking place following strict rules laid down by the government. There is no reason why we should not comply with the regulations," Rahman said.

Even though the BSBA chief said the companies comply with all the rules, as many as 26 workers have died while at work since the court order in March 2009.

Government officials also say ship breaking operations are under stringent supervision. "Prior to the court order, ship breaking took place haphazardly. No one ever bothered to seek our permission. But since the court order, things have dramatically changed. Businessmen now come to us for inspection and clearance certificates," said Mohammad Zafar Alam, director of the Department of Environment, Chittagong Division.

Alam said they have installed facilities as directed by the court and have arranged to train workers on safety measures.