prevent and prosecute
At 2:43 a.m. on Nov. 3, 2007, a uniformed police officer noticed a stretch of darkened streetlights on his assigned patrol in east Mesa, Ariz. Knowing there had been previous streetlight wire thefts in the area in the last few months, the officer investigated further and located a suspicious vehicle, along with three suspects and a large quantity of copper wire in close proximity to the vehicle. The suspects were arrested and booked on suspicion of aggravated criminal damage and felony theft. In this incident, the thieves were responsible for taking approximately $29,000 worth of copper wire and causing $24,000 worth of damage.
For the last five years, Mesa has been battling an escalating copper theft epidemic. In fact, during its last fiscal year — July 1, 2007 to June 30, 2008 — there were copper thefts at 113 different locations, totaling 132,000 linear feet of wire. “That is our fourth fiscal year of it being a problem — and our largest,” says Michael Mason, field operations streetlights foreman for the City of Mesa Streetlights Department. “It's been growing year by year.”
Unfortunately, the rise in copper theft isn't confined to Mesa. Throughout the country, states, municipalities, and private companies have been contending with losses associated with copper theft. In 2007, the U.S. Department of Energy called copper theft a $1-billion problem that was getting worse.
Although copper in almost any application is vulnerable to theft, utility substations report the majority of incidents, mostly involving copper grounding wire and even transformers lately. In September, for example, Detroit Edison had 4,000 feet of wire stolen from one location.
New construction on unoccupied housing developments is also a prime target for copper theft activity. Many in the industry share similar horror stories. “People are backing up to a house, putting a chain around the service from their truck and just driving,” says Keith Jentoft, president of White Bear Lake, Minn.-based RSI Video Technologies. “All the wire just goes ‘pop, pop, pop, pop, pop’ out of the wall until it all comes out.”
One of the worst incidents Jentoft has heard of in the residential arena is a large home that was stripped of all its wire. Then a forge was made in the basement to melt off the insulation. “Besides having holes cut in all the boards and walls, there was a sludgy smoke over the entire house and a big hole in the concrete slab downstairs,” he says. “It cost the guy tens of thousands of dollars to fix.”
Foreclosure properties are also being exploited by copper thieves. In March, police in Cleveland Heights, Ohio, broke up an organized copper-theft ring that used foreclosure lists to pinpoint targets. Ironically, the burglars based what houses to hit on information provided by the Cuyahoga County Sheriff's Office. When police arrested two Cleveland men, they were carrying road maps, tools, and eight pages of handwritten sheriff's foreclosure listings. Inside the suspects' van was 200 pounds of copper.
Campus construction sites have also been raided. Three separate incidents were reported on the campus at the University of Michigan, Ann Arbor, Mich., on April 23, and another one April 30, according to The Michigan Daily. In all, 14 thefts have been reported on campus since last May, costing companies working on campus about $13,000.
Railroads, another likely target, have begun burying signaling wire or using fiber-optic cable instead of copper, according to a spokesperson for Union Pacific Railroad, Chicago, which lost 8,800 feet of signaling wire that contained copper in a 2006 heist.
The perfect storm
The rise in thefts correlates to the escalating price of copper. “That's how we know copper is at its peak — when it becomes common knowledge, and we see a rise in these incidents,” says John Mothersole, principal, Pricing and Purchasing Service, Global Insight, Washington, D.C.
In 2003, the collapse of a copper mine in Indonesia exacerbated already-rising prices driven upward by increasing demand for the metal from China, India, Europe, and the United States — the latter for both new construction and the ramp-up in defense spending for the upcoming war in Iraq.
Emerging from 2002's historic low of 65 cents a pound on the London Metal Exchange, copper began trading at more than $1 per pound. Then, in late 2004, workers at a copper mine in Chile went on strike. By 2005, prices climbed to more than $2 a pound, yet demand — especially from China — continued to rise. This prompted investors to diversify their portfolios by adding base metals (copper, in particular) and creating index funds out of commodities that were previously considered too erratic.
In May 2006, due to the deficit condition — where production lagged behind consumption — the price of copper spiked to $3.99 a pound. Since that time, with the softening of the U.S. construction market and China's refusal to pay $4 per pound, the price has remained around $3 a pound (see Electrical Wholesaling, “Red Metal Raging,” May 2008).
By some estimates, the going rate for trading in copper at a reputable scrap yard is between $2 and $3 a pound, depending on the quality and size of the scrap and region of the country. Five years ago, Vedder Electric, Ann Arbor, Mich., would trade the contents of its scrap metal bin with a 300-pound capacity for between $100 to $150. Sometimes, the company would give scrap away to people who asked for it. With the increase in price, that's no longer true. “Now we get about $500 for it, and that's just from keeping our trash,” says Matt Whybark, manager of Vedder Electric, adding that the bin has been the object of two prior thefts.
Forecasts for 2009 are predicting a price decline in the range of $2.50 a pound, prompting some to hope for a subsequent drop in the crime (see Copper's Downside Potential on page 42). Yet many industry analysts are skeptical of a decline, citing base metals as perceived as an abundant source of easy money.
The reality is that dealing in the illegal copper trade is anything but easy — or even safe. The money offered for stolen scrap seems paltry in comparison to the risks some thieves take. In fact, several perpetrators have been killed or seriously injured in the act of stealing copper from electrocution or other accidents.
For instance, two men in Ohio were found dead as the result of pursuing ill-gotten copper in 2006. One was found in a utility substation next to bolt cutters near an energized 138,000V line. The other was found dead on a plant floor, having cut through an electrical wire and then falling 25 feet to his death. “If these people are not so smart, they don't stay on the job long, do they?” asks Chriss Cull, VP of Issaquah, Wash.-based Identification Technologies (IDT).
Although no official correlation exists between copper theft and methamphetamine use, many officials say there is a connection, which may go a long way in explaining the willingness to take such risks. The faltering economy and loss of jobs also have been blamed for the rise in this type of crime.
Law enforcement officers claim that many of these crimes are committed by people with knowledge of the infrastructure, possibly from those previously employed in the industry. Police have caught several perpetrators actually impersonating utility or construction workers, with official uniforms and vehicles. In some cases, the construction workers who installed the wiring are later found guilty of having come back to steal it. “Some of these people are very adept,” Mason says. “They are experienced enough to know which wires to cut to kill a circuit downstream so they can easily cut it and yank it out without having any personal injury.”
Students on the lookout for quick beer money may be the most likely suspects for an on-campus theft, but Whybark rules out the majority of the student body at Michigan on the grounds of ignorance. Most students wouldn't see dollar signs in a big bin filled with used wire. “I would not say it would be students unless they know the industry a little bit,” he says.
No matter how skillful the thief, the cost of repairing damages often exceeds the value of the stolen metal. Last year, the cost to Mesa totaled $253,000 in wire and associated damages. “That's the cost of the wire, the labor to check it, and the labor to pull it back in,” Mason says.
After a typical theft, Mason must replace the conductors, which the city buys through its own materials and supplier warehouse, in addition to a $25 splicing fee at each of the tampered pole boxes and the costs for the contractor (up to $3.10 a linear foot) to pull it back in. “It's not uncommon for me to lose 20 pounds of bare copper wire, which is about 400 feet,” Mason says. “That costs about $1,200 to put back in and takes two to three working days.”
An ounce of prevention
CCTV systems have proven a useful weapon against copper theft in certain applications. Sometimes, the mere presence of a camera can act as a deterrent. But in the case of an actual incident, the footage requires monitoring and often clear images of the perpetrators — mostly in dark clothing and with hoods over their faces — which are impossible to glean from tapes. In addition, most systems require broadband or electrical connections, which are impractical for vacant and remote locations. “We have too much area to cover for cameras,” Mason says. “We have about 125 square miles with more than 37,000 streetlights.”
For that same reason, fences and razorwire are also impractical. In addition, locking steel pole boxes isn't in the city's budget. Currently, the Mesa streetlight department is looking into concrete pole boxes with an esoteric bolt that requires a special tool to open. In the meantime — on the advice of local law enforcement — it uses Purple Powder, which is similar to the exploding dye packs that banks use. “The purple powder has yielded one suspect,” Mason says. “They caught a person with the purple powder stains on his hands.”
At construction sites, erring on the side of caution can go a long way toward preventing metal theft. To this end, Whybark has changed the way his company does cleanup work at the end of the work day. When his staff works on long-term projects, they don't store copper wire or other valuable materials at the job site. Copper supplies in the company's warehouse are generally kept out of sight and “tucked away.” In addition, the company's scrap bin is secured by a locked fence.
A pound of cure
In addition to deterrence, owners and contractors should also provide a means of identifying their stolen wire, which can be especially helpful when prosecuting suspects. Mesa spray paints its conductors red, and is considering putting a hot ink imprint that says “Property of City of Mesa” in the insulation wire. “That way, when the recycling centers see it, and it's not coming from a city truck, they'll question what's going on,” Mason says.
Using the same concept, a higher-tech identification system is currently being used on bare copper wire in several utility substations, and in the construction industry can be used on other materials such as tools and equipment. “You can spray it on virtually everything,” Cull says.
Thousands of encoded microchips can simply be sprayed on the entire length of the cable, making it possible to later easily identify the lawful owner. The microchips are located by the ultraviolet trace that is contained within the water-based, non-corrosive adhesive viewed under a blacklight with an ×30-powered handheld microscope, which can be provided to law enforcement and scrap metal dealers. However, one drawback is that — if it's used on insulated wire — a thief can simply remove the insulation (usually by burning), and the identification is no longer there. “Within a utility substation, there's no problem because it's all bare copper,” explains Cull.
In an effort to curb theft rates, many states have passed laws requiring stricter bookkeeping on the part of the scrap yards. “There's a state law in Arizona that precludes the average person from selling bare, stripped, shiny copper wire,” Mason says. “If you're from a company or a construction outfit, you can do it under the company name.”
Independent sellers, referred to as “peddlers,” are now required by many states to show a photo ID or leave a thumbprint on file. In some cases, scrap dealers pay cash only for hauls below a set amount; otherwise, a check is sent to the address on file or from the ID.
On the federal level, Senators Orrin Hatch (R-Utah) and Amy Klobuchar (D-Minn.) recently introduced the Copper Theft Prevention Act of 2008 to the Senate, which would make it tougher for thieves to sell stolen copper to scrap metal and other dealers.
Under the act, scrap metal dealers would be required to keep records of copper transactions, including the name and address of the seller, the transaction date, the amount and description of the copper, and the number from the seller's driver's license or other government-issued ID card; maintain these records for a minimum of one year and make them available to law enforcement agencies to assist them in tracking down and prosecuting copper thieves; perform transactions of more than $250 by check instead of cash; and, impose civil penalties up to $10,000 for failing to document a transaction or for engaging in cash transactions of more than $250.
According to Hatch, the bill does not preclude states from enacting their own laws, but it does establish a baseline from which all states must operate. Representatives Bart Stupak (D-Mich.) and Jim Ramstad (R-Minn.) are sponsoring a companion bill in the House of Representatives.
These measures — both federal and state — have the full cooperation of many scrap dealers. The Institute of Recycling Industries (ISRI), Washington, D.C., a trade association for scrap yards, has created a theft alert system to notify its members about specific theft incidents and set up an awareness program with the National Crime Prevention Council, Arlington, Va. It has also made available to its members best practices for avoiding hot scrap metal.
Despite the new laws and practices, there are still some shady dealers, called the “gray market” — around 1% of the total industry — willing to buy the scrap with no questions asked in order to turn around and sell it to legitimate dealers. In this case, the thieves would receive considerably less for their efforts (around $1.50 a pound). It has also been reported that some thieves trade scrap for drugs in lieu of money.
Of all the measures used to combat the copper theft epidemic, the most effective have been awareness and cooperation programs involving local police departments and the public. In fact, several thieves have been apprehended literally up a pole after police were given instructions as to where to look for them. To raise public awareness, RSI posts video footage of actual incidents on its Web site at http://www.coppertheft.info/videos_of_actual_incidents.asp.
Without prior knowledge of thefts in the area, the uniformed Mesa police officer wouldn't have been tipped off to the presence of criminal activity by darkened streetlights. “What's helped the police department the most is my manager has assigned me the task of staying on top of this,” Mason says. “I notify the police officers and analysts. All the wire thefts come through me, and I funnel all the information to 31 police officers and analysts.”
Mesa uses a mapping system to track incidents. It also take samples of wire left behind to provide lot numbers, manufacturer name, date, insulation rating and wire size. “Sometimes, they can't strip the wire, so they try to sell it with the insulation on,” Mason says. “This has helped the police officers a lot.”
Finally, the most effective weapon against copper theft in Mesa has been a board with copper wiring in different sizes and from different locations throughout the city mounted onto it, which the department uses to teach patrol officers and detectives what different types of wiring look like and where they come from. “It takes the police department a while to build their evidence, but they usually catch the thieves,” says Mason. “I'm aware of 11 suspects that have been captured since July 1, 2007.”
The arrests themselves can act as a theft deterrent, but according to Mason, in this climate, eventually there's always someone else desperate enough to take the chance. “Several times when they make these arrests, the wire thefts go way down,” Mason says. “But then somebody new gets in on it.”
Sidebar: Copper's Downside Potential
Despite a market still in deficit conditions and a low inventory, copper prices are expected to decline in 2009, according to John Mothersole, principal, Pricing and Purchasing Service, Global Insight, a Washington, D.C.-based economic and financial analysis firm. In a building materials outlook, Mothersole presented copper as a commodity in price decline, with a small surplus expected in 2008 that widens out in 2009, pointing to even lower prices. “It's good news for copper,” he says.
Currently, prices are less than $6,000 per metric ton, but have the downside potential to achieve marginal costs near $4,000 per metric ton. The only gray cloud on the price break horizon is that Chilean mining remains troubled, which could potentially cause bottlenecks for inventory and higher costs.
When asked if the price decline should provide some relief from the copper theft epidemic, Mothersole responded, “Without a doubt. It may take some time, but there will be some relief.”