Pentagon selling aviation history

NEW YORK (Reuters) - From the Cold War to the space race, from Vietnam to Iraq, the U.S. military is selling bits and pieces of its aviation history.

In 16-square-inch (100-sq-cm) bits and pieces, to be precise.

Around 2,000 obsolete warplanes and other aircraft owned by the U.S. Defense Department will go on a virtual auction block next week as the Pentagon takes advantage of a boom in scrap metal prices to make some money.

The three-day, online auction of 27 million pounds (12.25 million kg) of scrap is expected to fetch approximately 36 cents per pound, or between $9 million and $10 million, said Tom Burton, president of Government Liquidation, a subsidiary of Liquidity Services Inc, which is conducting the sale.

"The market is so robust right now for all scrap metal," he told Reuters in a telephone interview from Arizona. "We are very fortunate, timing is everything."

Since 2005, the price of most metals has risen, driven by demand from China, India and other developing economies.

Copper, which is selling for almost $4 per pound, could be bought for 60 cents per pound four years ago. Steel and aluminum prices are on the rise and scrap metal, an ingredient for many steelmakers, is at record highs.

The Defense Department has been parking old planes in "the boneyard" on Davis-Monthan Air Force Base in Tucson, Arizona. There are about 4,200 hulls, some up to 50 years old, and they have been cannibalized for parts over the years.

There are C-141 Starlifters, the heavy-duty cargo planes that went into service in 1965, and Navy and Marine A-4 Skyhawks that cost $860,000 each when new in 1956.

Also on sale are S-3 Vikings, prop-driven T-34 trainers dating from 1948 and HH-3E "Jolly Green Giant" helicopters. Burton said buyers might even get scrap from booster stages from Titan rockets, which launched missiles and spacecraft.

They are being sold mostly for their ferrous and nonferrous scrap metal including aluminum, steel, magnesium and titanium, as well as rubber. The bulk of the planes are iron aluminum, which is aluminum that has steel or iron parts cast or screwed into it, such as transmission housings.

But, Burton said, the buyers have to cut up the planes into pieces four inches by four inches.

"There is some sensitivity that the items not get out of (government) control and risk national security. So the purchaser will do the mutilation into itty-bitty pieces," said Burton. "There will not be anything left that could be used as parts or that anyone but a smelter would be interested in."

Metals industry analyst Charles Bradford, of Bradford Research/Soleil, said some of the scrap would need to be reprocessed if it was mixed with other metals.

"But that may not add much to the cost, as it only takes about 5 percent more energy to remelt aluminum than it does to make the metal in the first place," he said. "The Chinese have been humongous buyers of aluminum and copper scrap."

But the cost of making steel from scrap was much higher relatively. Steel scrap is selling now for around $550 per tonne, while steel itself is selling for around $1,000 per tonne.

Government Liquidation has the contract to sell all scrap for the Pentagon, Burton said. "We just sold a Boeing in Georgia -- 90,000 pounds (40,820 kg) sold for 38.8 cents per pound."

He said next week's auction was the company's biggest.

The auction is open to qualified bidders only, mostly small businesses, Burton said. It begins on April 21 at 12:01 a.m. EDT (0401 GMT) and closes on April 25 at 8 p.m. EDT (midnight GMT). Buyers may view detailed information and photos as well as place bids ">here

(Editing by Eric Walsh)