Maria Ramirez and Mayela Armas

GUANTA/CARACAS – On Guanta’s eastern Venezuelan port, many trucks line up every day to dump tons of metal. It is all part of the government’s efforts to convert waste into foreign currency.

Because of the financial need of President Nicolas Maduro, scrap collection and sales have boomed. The industry is currently hampered by low oil production and U.S. sanctions that make it difficult to sell its most valuable export.

Douglas Lugo from Guanta said, “Venezuela will get lighter,” referring to a truck driver who lives on the outskirts. Lugo used to be an oil worker before moving onto transporting scrap materials. Iron waste, including sheet metal and car parts, was found in his truck.

Maduro has explored a variety of revenue opportunities under the pressure of Washington’s sanction. Although scrap had been exported in small quantities, the private sector has increased its efforts to export the material since mid 2020.

Maduro designated scrap in 2021 as strategic, allowing any surplus to export.

Eight years of economic crisis in Venezuela has seen the state tighten their grip on industries like construction and manufacturing. Meanwhile, OPEC members have suffered from mismanagement and underinvestment.

Private and state-owned companies with obsolete equipment, plants and machinery find it more tempting to scrap them. Prosecutors claim that the state was behind these activities. However, other workers have also taken equipment in order to profit.

PDVSA, a state-owned oil company, and other state businesses have been some of the top sellers in recent years as projects have stalled, and machinery has aged. According to Reuters, 15 sources including workers, businesspeople, and officials from different sectors told Reuters that PDVSA was among them.

Authorities are yet to confirm that the equipment was removed and traded. Communication and production ministries didn’t respond to our requests for comment.

Port records indicate that Venezuelan scrap was still being exported to India, Turkey, and Taiwan.

According to one document, two sources, even though the Venezuelan government-owned Corporation Ezequiel Zamora controls most of Venezuela’s scrap ports, it has also signed “partnerships,” or agreements, with private companies in order to export it. These partnerships have allowed it to circumvent U.S. trade sanctions that prevent Venezuelan state businesses from doing business abroad.

Two sources told Reuters that Zamora is paid by the companies in cash and foreign currency. Zamora didn’t respond to our request for comment.

According to another document Reuters obtained, around 25 companies are officially authorized to transport or sell scrap metal.

In 2021, 45.500 tons of iron and steel as well as scrap were exported out of two major ports. This was according to Import Genius data, which is a consultancy firm that collects customs records. It’s more than twice what it was the year before.

Other ports do not have numbers. Bolipuertos (the port manager) did not respond.

Scrap metal sales “have increased considerably during the months when the COVID-19 pandemic was most severe, when state revenues were low,” local firm Ecoanalítica said in a report in February.

According to Reuters, there is an international market where scrap that local companies purchase can be purchased for US$80-US$120 per tonne. However, it can also be bought for US$300 or US$700 depending on its type. Two sources and two transporters told Reuters.

According to a source from the oil sector, and two workers who saw the process of these materials being cut in warehouses in northern Monagas (an oil zone east of the Andean nation), tanks and pipes were being removed.

Source: “Nothing is being rebuilt today. Everything is up for sale,” the source stated under an anonymity because they were afraid of reprisal.

Equipment is being dismantled in other oil areas like Zulia and Anzoátegui, another industry source said. The source did not specify who from PDVSA ordered such actions.

However, with scrap metal trading booming, certain sales may be considered theft according to police reports and public prosecutor’s offices.

Reuters spoke to truckers who worked previously for coal or oil companies. They said they are now more inclined to transport scrap because they earn about 10x Venezuela’s minimum wage of $30 per month.

Everyone is involved in scrap metal. “You didn’t notice (…),” before,” said Antonio Astudillo. He used to transport food from Brazil, Venezuela, and Guanta, since December.

You can survive on money.