The Problem of Scrap Metal Theft

What This Guide Does and Does Not Cover

This guide begins by describing the problem of scrap metal theft and reviewing factors that increase its risk. It then identifies a series of questions to help you analyze your local scrap-metal theft problem. Finally, it reviews responses to the problem, and what is known about these responses from evaluative research and police practice.

While stolen precious metals include gold and silver—commonly targeted in residential burglaries—for the purposes of this guide, scrap metal theft includes mainly stolen copper, aluminum, brass, zinc, nickel, platinum, and bronze. These metals have value only when sold to a scrap metal dealer who arranges for the metal to be melted and reshaped for other uses. By contrast, gold and silver commonly have intrinsic value, either to the thief or to someone else who values the metal in its original shape.

Scrap metal theft is but one of the larger set of theft and sale of stolen property problems. This guide is limited to addressing the particular harms scrap metal theft causes. Related problems not directly addressed in this guide, each of which requires separate analysis, include:

• bicycle theft,
• burglary,
• shoplifting,
• stolen goods markets,
• theft from construction sites,
• theft from cafés and bars,
• theft of and from vehicles, and
• theft of outdoor household items.

Some of these related problems are covered in other guides in this series, all of which are listed at the end of this guide. For the most up-to-date listing of current and future guides, see www.popcenter.org.

General Description of the Problem

Throughout the industrialized world, stealing valuable metal has become a serious concern for the police, businesses, public utilities, railroad companies, and the community at large. Collaborative efforts to combat metal theft have occurred for several decades.1 However, reports of dramatic increases in scrap metal theft are occurring throughout the world. While we cannot be sure about the exact amount of metal stolen in the United States, an examination of media reports in recent years showed increased scrap metal theft throughout the country, with some areas showing double and triple the amount of reported theft.2 The following news accounts exemplify the growth of the scrap metal theft problem:

• The Tucson Weekly (November 2006) reported a one-year 150 percent increase in scrap metal theft.3
• The U.K.'s Guardian reported a fivefold rise in metal track theft, causing numerous delays and rising costs throughout the British railway network. Two months prior, the Guardian reported numerous Japanese playground slides' being stolen.4
• The Associated Press reported the beer keg industry is losing $50 million a year as customers are forfeiting their cash deposits and taking their empty kegs to scrap dealers instead, or thieves are stealing unsecured empty kegs around taverns and restaurants.5
• Reuters reports Russian police detained a 45-year-old city employee for stealing a bridge east of Moscow. The employee ripped the bridge down with his work truck, chopped up the metal, and sold it to a scrap yard.6
• The Dallas Morning News reported a 227 percent increase in scrap metal theft from 2005 to 2007.7
• The Associated Press reported that thieves were stealing vases bolted to West Virginia cemetery headstones and bronze markers on veterans' graves. In addition, the article reported that thieves have stolen a half million dollars' worth of brass ornaments from Chicago cemeteries.8
• The Boston Globe reported that fire departments across the country were reporting brass nuts' missing from fire hydrants, raising concerns that hydrants wouldn't work when needed.9
• Consumers Energy reported their Michigan utility outlets had suffered a 104 percent increase in copper theft during the first half of 2008 compared with the same period in 2007, creating serious infrastructure problems. The article pointed out these offenses may fall under federal terrorism legislation.10
• The Associated Press reported multiple police raids on six scrap yards owned by OmniSource, the largest scrap dealer in Indianapolis, after a year-long investigation. The company also employed 51 Indianapolis Metropolitan Police officers.11

Despite these dramatic headlines, a small percentage of scrap metal theft cases involve large amounts of metal. Instead, most involve small amounts taken in each incident, often with repeat victims. Utility companies are especially susceptible for repeat targeting, and when victimized pose critical threats to the country's infrastructure.

Harms Caused by Scrap Metal Theft

Economic consequences for scrap metal theft within utilities can be immense. According to perimeter security companies, the cost of repairing damaged transformers or substations can run anywhere from $500,000 to $11 million.12 Costs include:

• replacing any metal components stolen,
• repairing equipment damaged during the theft,
• repairing operating systems damaged because of stolen wires,
• reimbursing customers inconvenienced or facing their own economic losses,
• covering revenue lost to the utility, and
• covering expenditure increases needed to cover loss and/or adding improved security surrounding the utility company.

Damaged power equipment resulting from scrap metal theft also poses significant risk to utility repair teams as well as offenders. Petty-metal thieves who are drug addicts do not assess risk effectively when deciding to steal metal/copper from high-voltage substations, transformers, or electric high wires, and many have been electrocuted while trying to cut live wires from abandoned buildings and electric substations.13

Factors Contributing to Scrap Metal Theft

No single factor accounts for the rise in scrap metal theft. Instead, a combination of high demand for metal on the international market, increased opportunities for offenders to target places and metal types not previously susceptible to theft, and weak regulation of the metals resale market have coincided to increase the scrap metal theft problem.

International Industrialization and the Metals Market

In early 2002, copper's price hit record lows, falling to 65 cents a pound on the London Metal Exchange. This changed as other Asian countries began to rapidly industrialize, with China receiving the most attention because of its 20 percent global copper consumption and Olympic preparation. Scrap materials became the second largest American export to China behind electronics.14 By mid-2006 copper was worth $4 a pound. Demand in Europe and the United States increased in 2003, driven by new construction and impending wars in Iraq and Afghanistan. Since 2003, the four basic nonferrous or base metals—aluminum, copper, nickel and zinc—have been in high demand, and costs as well as demand have more or less continued to increase.

The rise in scrap metal theft is driven by offenders' recognition that ample metal supplies remain unguarded, and that the price of return remains historically high based on heavy international demand. The metal market conditions made unsecured metal susceptible to increased theft, while causing a boom in scrap metal exports that increased the scrap metal theft problem. According to the U.S. International Trade Commission, the United States exported 6 million tons of scrap metal to developing nations in 2000, and over 18 million tons in 2007.15 According to the American Scrap Coalition,§ scrap metal reached record levels of $600 a ton in 2008.16 The international demand has exceeded the supply since 2003, causing new financial opportunities for scrap metal thieves. However, the end of 2008 saw world market metal prices drop significantly, with the Chinese Olympics a distant memory and subsequent evidence that scrap metal theft has decreased. While international price drops may have resulted in decreased theft, some people claim that changed state legislation with increased reporting of purchases has also impacted theft.17 However, not all states have instituted legislation aimed at scrap dealers, and federal legislation is still pending. Moreover, the United States continues to export large quantities of scrap metal internationally, and demand continues.

§The American Scrap Coalition is a Washington, D.C.-based nonprofit corporation that replaced the Emergency Steel Scrap Coalition in 2004. Founding members include the Steel Manufacturers Association, the American Foundry Society, and the National Precast Concrete Association. In all, more than 1,500 companies are members of these three associations.

Other countries have put their scrap metal dealers out of business by refusing to allow them to export their product. For example, some African countries (e.g., Uganda, Tanzania, Kenya) suspended the export of scrap metal as a means to combat electrical and water equipment thefts that were causing critical infrastructure problems.18 A group of U.S. steel scrap industries created the American Scrap Coalition in response to global scrap-metal trade barriers. While the price of metal rose dramatically, many countries restricted their exports, but U.S. exports continued at record levels. The scrap metal supply did not keep pace with the international demand, causing a crisis of scrap metal availability and increased pay from scrap metal dealers.

Property Foreclosures

The housing market crash began during the time metal prices remained high. Consequently, thieves found the copper piping coming from plumbing, telephone lines, and heating/air-conditioning systems in several foreclosed properties to be worth more than the property itself, creating an environment ripe for increased theft and gutting of properties for precious metals.§§

§§ Some foreclosed-property owners have resorted to posting signs on the property indicating there is no valuable metal piping in it, to at least try to discourage thieves from breaking in to find out.

Foreclosed homes as well as new construction sites become inviting targets to metal thieves by giving out environmental cues that the property is unprotected. Banks have denied loans to buyers of foreclosed properties if they know metal theft has occurred, since buyers are more likely to default with such properties, creating additional problems within the slumping housing market.19

The Problem Analysis Triangle

The problem analysis triangle is a useful framework for understanding scrap metal theft. Figure 1 illustrates the multiple causes of scrap metal theft. Each of these causes is briefly discussed.

Fig. 1. A problem analysis triangle depicting general and specific causes of increased scrap metal theft.

Motivated Offenders

Scrap metal buyers provide the necessary link for creating profit from scrap metal theft. The scrap metal theft problem is driven entirely by the ability to sell stolen goods to recyclers, and often these recyclers facilitate crime. While there is some recognition that thieves distribute other stolen goods to friends/family,20 they are far more likely to sell stolen metal for cash at a scrap metal yard where they may or may not know the buyer. Communities struggling with metal theft may find it difficult to convince the public that the problem is serious. According to national crime survey data, receiving and selling stolen goods tends to be ranked as one of the least serious crimes,21 where buyers do not recognize the crime as much as getting a good deal."22 Communities confronting scrap metal theft problems should consider the different offenders working with scrap metal dealers for profit, and determine how these transactions can become more costly for both parties.

Scrap metal buyers may determine the types of metal needed, as well as point out susceptible targets.23 Other dealers may be more passive, but nonetheless provide an outlet for stolen metal. When legitimate scrap metal dealers refuse to buy suspected stolen metal, thieves are likely to respond by seeking out a gray-market dealer who will pay considerably less cash. Larger scrap dealers often know and trust gray-market dealers, who profit after reselling the stolen metal that the larger dealers had originally turned down.24

Thieves and sellers of scrap metal succeed when they find vulnerable targets at particular places during particular times when capable guardianship is lacking. These offenders may not necessarily be seeking out metal, but instead happen upon unsecure sites where valuable metal is left out in the open. Those who know local scrap metal dealers who will not question where the metal came from will foresee the opportunity to sell the unsecured metal, if it is easy to do so.

Drug addicts, particularly crystal methamphetamine users, appear to be linked with specific types of scrap metal theft. To support their drug habits, they require repeated and quick access to small amounts of cash, which they can easily obtain by selling small amounts of stolen metal to scrap metal dealers.25 However, there is little doubt that other types of drug addicts also steal scrap metal to support their habits.

Organized thieves are more likely to steal large hauls of copper wire, while opportunistic petty thieves are more likely responsible for the more hazardous thefts occurring from electric substations and utility poles. However, you should note that opportunistic offenders with knowledge of how to process stolen metal into cash with local scrap metal dealers are more likely to target large quantities of unsecured yet valuable metal. These opportunistic offenders are likely to be contractors, construction workers, scrap metal dealer employees, or juvenile offenders who randomly observe unsecured construction sites or vacant properties and sell valuable metals.

Places

According to a 2007 report, copper theft is highest in Hawaii, Arizona, California and Oregon, and is increasing in the rural Midwest and South.26 Urban and warmer locations appear particularly susceptible to numerous thefts of small amounts of scrap metal by transient populations who often do not own a car. Communities without nearby scrap metal dealers are probably more secure from scrap metal theft than those with a ready supply of them. Scrap metal theft affects every state, and particular places within local communities are especially susceptible to it, such as the following:

Vacant and foreclosed properties are especially susceptible to theft because they often lack effective guardianship and are easily identifiable.

Construction sites become susceptible to theft when contractors leave metal such as large spools of copper wire unsecured. While wire theft can occur almost anywhere, new construction sites and vacant housing are more-easily discernable targets.§

§ See Problem-Specific Guide No.43, Burglary at Single-Family HouseConstruction Sites, for further information.

Playgrounds have been targeted by metal thieves for their metal slides and underground wiring that is difficult to secure.

Taverns that leave their empty beer kegs unsecured outside are theft targets and lose their deposits.

Churches/cemeteries have been targets of metal thieves because of the value that metal roofs or bronze statues and plaques have to scrap dealers.

Scrap/salvage metal dealers often become targets of metal thieves if their inventory is left unsecured. Scrap metal dealers are in a peculiar position of both contributing as offenders and being victims of scrap metal theft. Indeed, it becomes a challenge for the police and the wider community to determine which role each scrap metal dealer is playing, and it is likely that scrap metal dealers may be taking on both roles. Regardless, unregulated scrap metal dealers are likely to contribute to outlying community crime.

Targets

Susceptible targets for scrap metal theft can include any unsecured metal. Certain types of metal prices will fluctuate, and dealers may specify what types of metal they are buying, thereby notifying sellers of what is in current demand. Some specific targets of scrap metal theft include the following:

Plumbing fixtures, especially in property that does not have capable guardianship, frequently get ripped out of bathrooms and kitchens and sold for scrap.

Copper wires/cables of all kinds, especially uninsulated wires/cables, are susceptible to theft. Thieves commonly target the copper wiring in electric transformers at utility substations.27

Air conditioners are targeted for the copper tubing in the coils.§

§ The Puyallup (Washington) Police Department reported that thieves have been known to mark air-conditioning units with the word "scrap" and dismantle them to obtain the copper coils and cooling cores. If anyone questions them about their activity, the thieves point to the marking to confirm that the equipment is to be scrapped. Thieves also use the anhydrous ammonia inside the unit to manufacture methamphetamine.

Vehicle parts, and especially catalytic converters found in most vehicle undercarriages, are worth anywhere from $50 to $200 apiece from local scrap metal dealers due to the amounts of platinum, palladium, and radium§§ present in converters, in particular. Catalytic converters have been installed on vehicle undercarriages since 1975 and convert harmful pollutants into less-harmful emissions before they leave the vehicle's exhaust system. The National Insurance Crime Bureau reported a dramatic increase in insurance claims for catalytic converters during the first six months of 2008, greatly outnumbering the previous five-year total.28 Replacing a catalytic converter can run anywhere from $200 to over $1,000. SUVs and jeeps provide the best opportunity for catalytic converter theft because the ground clearance is so high, and often the converter is held on by four bolts, easily detached with a socket wrench.

§§ Like other scrap metal theft, the rise in theft incidents can be traced to the price of platinum. In 2002 platinum traded for about $608 per troy ounce. (A troy ounce is a metal measurement slightly larger than a common ounce.) In 2008, platinum sold for $2,083 per troy ounce on the New York Mercantile Exchange.

Beer kegs have become targets because many scrap metal dealers value them at $15 to $30 apiece, often more than the given liquor store deposit. Estimates in 2007 reported a loss of $50 million to the beer keg industry due to theft.29

Aluminum siding/gutters/roofs are targeted because they have copper flashing.

Bronze plaques and statues in cemeteries and museums are targets of metal thieves because they are nearly impossible to adequately secure.

Manhole cover and sewer grate theft has risen sharply throughout the industrialized world. Consequently, cities are finding innovative ways to secure the covers.§ Missing covers are not only costly, but also the thefts pose serious risks of injury and even death for motorists and pedestrians.

§ The Philadelphia (Pennsylvania) Public Works Department is chaining or internally locking manhole covers after thieves stole more than 2,500 in one year, up from an annual average of 100 (Bauers, 2008; Urbina, 2008). Costs are estimated at over $300,000 to replace stolen manhole covers and sewer grates. Other large cities similarly report dramatic increases in stolen manhole covers and sewer grates.