```

GETTING BUCKS FROM THE BANG
by Shawn Levsen

The Western NIS contains vast quantities of artillery shells, mines, rockets, and
other munitions that were left behind--often in poor and deteriorating
condition--after the collapse of the Soviet Union in 1991.  Commercially viable
disposal of these munitions is one of the many challenges of converting the
region's defense sector to civilian uses.  Alliant Techsystems, a leading U.S.
munitions manufacturer, expects to meet this challenge and generate as much as
$100 million in revenues over the next five years from a new munitions-disposal
venture in Ukraine.  Financed principally with private capital, Alliant Techsystems'
Ukraine project is also being supported by a $15.5 million loan guarantee from the
Overseas Private Investment Corporation (OPIC). 

The Western NIS countries, where the Soviet armed forces were once based in
large numbers, still contain immense stockpiles of surplus high-explosive weapons,
weapons systems, and related chemical and mechanical components.  Preliminary
estimates place such stockpiles in Ukraine alone at 800,000 tons.  Their metal and
chemical components are often commercially salvageable.  If left to deteriorate,
however, such munitions can create serious safety and environmental problems.   

NICHE OPPORTUNITY

It was the salvage potential of the metals, propellants, and explosives contained in
these stockpiles that attracted Alliant.  The Hopkins, Minnesota defense contractor
was already looking for new opportunities in "demilitarization," or disposal, of
surplus munitions when Ukraine became independent in 1991.  Together with
partner Rapierbase, Ltd., a British metals trading company, Alliant approached the
Government of Ukraine about demilitarizing the country's surplus munitions.   

According to Alliant spokesman Rod Bitz, the company already had decades of
experience manufacturing and dismantling munitions, knew how to handle large
volumes of munitions, and had developed its own environmentally-sound salvage
technologies when it first approached the Ukrainian Government.  "We've been
building munitions for more than 50 years," Bitz said, "so we also know how to
take them apart."  Alliant also had a prior relationship with the British trading
company, which had experience doing business in Ukraine. 

After lengthy negotiations with the Ukrainian Ministry of Defense and other
government agencies, Alliant and its partners established a joint venture, Alliant
Kyyiv.  The new venture opened a demilitarization facility in Ichnya, Ukraine in
January 1995.  With substantial Ukrainian Government participation, Alliant Kyyiv
will enable the Ukrainian participants to solve a major technical and engineering
problem--the disposal of dangerous surplus munitions--and to generate revenues
from the export of salvaged materials once export operations begin later this year.   
 

SPECIALIZED TECHNOLOGY

Alliant uses a three-step process to disassemble munitions, convert their
components to marketable commodities, and clean up associated wastes at
munitions storage sites.  The result is salvageable steel, brass, copper, and
aluminum.  Propellants and explosives are reclaimed, as well.  Alliant's
salvage-based process avoids the major safety and environmental problems
associated with traditional munitions-disposal techniques, such as burning,
detonation, dumping, and burial.  Bitz credited the U.S. Department of Commerce
with "very prompt and efficient" service in processing the export licenses required
to ship Alliant's proprietary salvage technologies to Ukraine.   

Alliant expects its Ukrainian venture, which began operation in January, to be at
full capacity (salvaging 150,000 rounds each month) by the end of the year.  OPIC
and Alliant expect it to generate $45 million in U.S. exports and create at least
100 American jobs. For more information on financing defense conversion projects
in Ukraine and Belarus contact BISNIS at (202) 482-4655, and ask for a trade
specialist.
```