By Diego Ore

CARACAS (Reuters) - Venezuela said on Tuesday it would start crushing abandoned cars and bicycles to provide raw materials for housing construction and supplement drastically reduced amounts of local steel.

"We have sent 10,485 automobiles, 9,651 motorbikes and 539 bicycles to the national steel industry," Maria Martinez, a deputy justice minister, said during a visit to an abandoned car deposit outside Caracas.

That quantity of steel, she said, could be used for rebars, which reinforce concrete, in the construction of tens of thousands of housing units.

In one of late socialist leader Hugo Chavez's most popular policies, the "Great Venezuelan Housing Mission," authorities built or refurbished more than 250,000 housing units in 2012 for low-income families. That fell to around 150,000 last year.

Production of rebars in March 2014 was at an 18-year monthly low of 8,796 tonnes, down from 46,051 tonnes in March last year.

Venezuelan steelmaker Sidor has an installed annual capacity of 5 million tonnes, but output has declined since its nationalization six years ago due to frequent protests and insufficient investment.

Total steel output reached a 16-year low of 1.5 million tonnes in 2012, and was only slightly higher at 1.6 million in 2013.

The steelmaker's problems are part of a general malaise in the South American OPEC nation's once-buoyant metals industry.


(Reporting by Diego Ore; Writing by Andrew Cawthorne; Editing by Toni Reinhold)