A cash-strapped Venezuela leans on scrap exports to raise hard currency – Reuters

April 1, 2022 by No Comments

GUANTA/CARACAS, April 1 (Reuters) – On the outskirts of the eastern Venezuelan port town of Guanta, hundreds of trucks line up everyday to unload tons of scrap metal, part of the government’s attempt to turn waste into a source of foreign currency.

The gathering and sale of scrap has been booming due to the financial needs of President Nicolas Maduro’s administration, crippled by low oil production as a result of years of under-investment in the industry and obstacles to selling its most lucrative export due to U.S. sanctions.

“Venezuela is going to get lighter, because they’re removing all the scrap,” said Douglas Lugo, a truck driver on the outskirts of Guanta who used to work in the oil industry before he started to transport scrap material. His truck was weighed down with iron waste such as sheet metal, car parts and pieces of rusty doors.

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Under pressure from Washington’s sanctions, Maduro’s government has been exploring a range of revenue options. Although scrap was sold abroad in very low quantities previously, private companies stepped up efforts to export it starting in mid-2020.

In 2021, Maduro designated scrap as “strategic”, clearing the way for any surplus to be exported, saying it was necessary to “turn it into foreign currency … to take advantage of every last resource that is out there”.

During eight years of economic chaos in Venezuela, state controls have increasingly slowed industries such as manufacturing and construction, while mismanagement and underinvestment have hurt the OPEC member’s oil sector.

State-owned and private companies saddled with outdated plants, equipment and machinery have found it increasingly tempting to sell them as scrap. While the state is behind some such activities, workers and others have also stolen equipment to sell at a profit, prosecutors say.

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Source: https://www.reuters.com/world/americas/cash-strapped-venezuela-leans-scrap-exports-raise-hard-currency-2022-04-01/

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