Afghan scrap yards eye unwanted U.S. gear for steel industry

KABUL Wed May 15, 2013 2:44am EDT

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KABUL (Reuters) - U.S. forces in Afghanistan are hoping that a small steel industry can be born from the mammoth task of withdrawing equipment by the end of next year, jump-starting a scrap trade and injecting cash into local businesses.

It will cost the United States almost $6 billion to remove the enormous amount of materiel scattered in hundreds of bases across Afghanistan from the longest war in U.S. history.

Most will be returned to the United States by land, air and sea routes, namely via Pakistan's Karachi port, but some of the equipment will stay on after the Dec 31, 2014 deadline for the exit of most combat troops.

U.S.-made scrap from the war could be worth over $80 million on the international market, according to Reuters calculations.

"Scrap is a big deal," said U.S. Brigadier-General Steven Shapiro, deputy of 1st Theater Sustainment Command, which oversees the "retrograde" or the removal of equipment.

"Ultimately the military can only do so much, the diplomats can only do so much, ultimately you want to generate economics," Shapiro told Reuters in an interview this week.

His unit organized what he amusingly dubbed a "scrap shura" last month south of the capital Kabul where businessmen were invited to learn about steel and scrap.

"Now they're coming in and bidding on the tonnage," Shapiro said of the tens of thousands of empty shipping containers and old models of Humvees and MRAP armored vehicles, which cost half a million dollars each to make, and which will be scrapped.

Proceeds from sales are returned to the U.S. treasury by the Defence Logistics Agency in Virginia.

U.S. scrap could breathe life into Afghanistan's fledgling steel industry, which only has five working mills, according to government-run Afghanistan Investment Support Agency.

Twelve years of the NATO-led war and billions of dollars in steady aid means Afghanistan is riding on a construction boom, but it must rely on steel imports from Pakistan and Russia in an increasingly expensive market.

For steel mill chief executive Parwiz Khojazada, the prospect of buying U.S.-made steel is a godsend.

Rusty, Soviet-built tanks dot the dirt road to his Maisam Factory on the outskirts of Kabul, a stark reminder of the humiliating end met by Moscow more than 20 years ago.

In an updated version of swords being beaten into ploughshares, Khojazada said his company smelts the tanks into steel bars, and is now eager to do the same with U.S. equipment.

"I don't pay much attention to the fact war brought it here, I just care about the quality," Khojazada said of U.S. scrap, perched in his office overlooking his sprawling plant, where black-faced workers were gathering steel bars.

He knows first-hand how good American steel can be: 10 percent of Maisam's 1,000 metric tons (1,102 tons)of finished products per month are made from U.S. war equipment scrap.

(Reporting by Amie Ferris-Rotman; Editing by Michael Perry)

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