Red Gold Rush: The Copper Theft Epidemic

Copper has never been more valuable, or more stolen. Inside the metal theft epidemic and CSOs' struggle to contain the problem.

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Many businesses have contracts with the local scrap yard. These six men would be peddlers—unknown and unaffiliated. Some yards, says Steve Solomon, who owns Solomon Metals, a scrap yard in Massachusetts, won't deal with peddlers, so the thieves will send in someone else who the yard can trust. If the thieves are known around town or have reason to worry they might be discovered (all sources said you need an ID to sell any significant amount of metal) or suspect someone has reported their metal stolen to the scrap yard, they will travel two counties over to another scrap yard, says Lane.

Say the scrap yard agrees to buy the stolen scrap. If the price of copper is $3 per pound at the time, the peddler will get quite a bit less than that, perhaps 60 to 75 cents on the dollar, depending on several factors, says Bryan McGannon, a spokesman for the Institute of Scrap Recycling Industries (ISRI), a trade association for scrap yards. Those factors include the quality of the scrap, size of the haul and the region of the country. In this case, the 800 pounds of copper stolen from Duke Energy is off-the-spool, industrial-grade copper. The dealer agrees to pay $2.50 a pound for the copper and hands over $2,000 in cash to the peddler. "Not bad for an hour's work," Lane says. "Why would you break into a house or a store?"

If the scrap dealer, suspicious, refuses to buy the copper, the thieves will seek out a gray market dealer with lower standards and fewer questions. Lynch at DTE has discovered such rackets and says the thieves would get considerably less cash, maybe 50 cents on the dollar or less, $1.50 a pound if they're lucky. (That still yields $1,000.) The gray market dealer will then have to sell to another scrap yard that trusts him, for the higher rate of $2.50. Several sources describing this market said the dealer might split up the haul and sell it to other dealers or directly to a metal manufacturer.

However the metal gets to a legitimate scrap yard, the dealer adds the 800 pounds of stolen metal onto a pile of high-quality copper scrap, one of many piles sorted by metal type and quality. Legitimization of the stolen metal has begun; the stolen scrap and the honest scrap are mixed into a pile or compressed together into a bale, like hay.

The scrap yard sells the bales and other sorted scrap to metal manufacturers, tons at a time, for something closer to the $3 per pound going rate, maybe $2.75. The metal manufacturers then mill it. It's smelted. The stolen copper and honest copper are liquefied and amalgamated, swirled together as one. Out of this process, says ISRI's McGannon, comes copper cathode—the commodity that's trading at $3 per pound on the London Metals Exchange. Cathode is sheets or bars of copper, like red gold. The copper manufacturers sell the cathode to companies in emerging Asia for near the going rate, $3 per pound. At the local port, the small city of containers that have just been emptied of their bric-a-brac stamped "Made in China" are reloaded with the copper cathode, put back on the boats and sent to markets around the globe.

In China, the companies that bought the metal extrude it, turn it into products, probably wires or plumbing, and sell it to a contractor there. The contractor brings it to a construction site. The stolen metal's journey is over. The 800 pounds of industrial grade copper wires that were meant to carry electricity across South Carolina are now part of pipes carrying hot water to a lavatory on the 37th floor of a fantastic new high-rise in Shanghai.

How the Drug Problem Got to Be Mike Dunn's Problem

Smoking or injecting methamphetamine produces a flash of unregulated pleasure—dopamine floods the brain—that lasts up to 12 hours. Snorting or ingesting it produces euphoria, relatively less intense than a flash but a high that will last as much as a day, according to the National Institute on Drug Abuse (NIDA). One form of methamphetamine, crystal meth, also known by names like ice, crank, glass and tina, effectively combines the two. It creates a rush and a high.

As with cocaine, another stimulant, users of crystal meth are highly alert; they don't need sleep. Appetite decreases while activity increases. But crystal meth stays in the system 12 times longer than cocaine. With all that time and energy, high users can set about procuring the funds that will get them more crystal meth. They can, for example, break into an electrical substation to take grounding wires and other metal to sell at a scrap yard for cash.

To combat the theft of copper grounds from substations, Dunn at American Electric Power says his company replaced the all-copper grounds with ones that consisted of copper wound around galvanized metal, known as copperweld. The idea was to remove the value of the target; copperweld is worth far less than pure copper grounds. And unwinding the copper from the cheap metal rod, Dunn says, would take hours.

Nevertheless, as soon as he put such a ground in, it was stolen. "They had to have been in there for hours for what? A hundred bucks of copper?" says Dunn.

Some metal thefts like this at first seem bizarre—Herculean efforts put forth for minimal payoff. But they make sense when put in the context of crystal meth. Meth addicts have been known to go on intense and repetitive activity sprees like cleaning a floor with a toothbrush. Carefully unwinding copper seems leisurely by comparison.

Dunn also recalls a rural stretch where someone apparently went utility pole to utility pole cutting off the grounding wire running down the side of the pole as high as the thief could reach, for miles. News stories and authorities from other regions cite further examples: In Arizona, someone climbed a pole and reeled in 4,400 feet of copper wire (a very heavy load) before, apparently, falling off the pole and fleeing, injured, with the wire. In Ohio, 400 feet of aluminum bleachers was nabbed. Three men in Russia used a blowtorch to cut 5-foot sections of narrow-gauge rail from a train line. By the time they were caught, they had cut and hauled 50 tons of it. In one week in the Ukraine, a museum's historic 14.5-ton locomotive was stolen and cut up for scrap, and so was an 11-meter metal bridge, the only road in and out of a town.

A single high dose of crystal meth has been shown to damage nerve terminals in the brains of animals, as have long periods of lower doses. The more one uses meth, the more one needs to use it. Addiction comes rapidly and leads to hard-to-fathom binges. A gram of crystal meth could last a week when you start; on a binge, an addict might take a gram every three hours for several days, without sleep or food, according to NIDA. Addicts become violent and confused and eventually exhibit clinically psychotic symptoms, like paranoia, hallucinations and something called "formication"—the sensation of insects crawling all over the skin.

When addicts stop using crystal meth, they don't suffer physical withdrawal symptoms like the shakes. Instead they are left with depression, fatigue and a craving so intense that they will take extreme measures—climbing utility poles carrying deadly amounts of live electricity, say—to get more.

It's hard for someone sober to comprehend the craving, says Joe Frascella, the director of the Division of Clinical Neuroscience and Behavioral Research at NIDA. To try, he says, imagine holding your breath for one minute. "You get to a point, near the end, where all you can think about is taking a breath," he says. "You're in a panic state. A drive state. Nothing else matters except breathing." In a sense, Frascella says, craving crystal meth is not unlike living in the moment before you drown, for days on end.

It's important to point out that not all meth addicts are metal thieves and, likewise, not all metal thefts track back to meth addicts. No scientific data exists yet that confirms the link between the two, but CSOs and law enforcement say the link exists. Many interviewed for this story mentioned the drug unprompted. Indeed, hot spots of crystal meth abuse—Hawaii, the Southwest, San Diego, Oregon, and increasingly the rural Midwest and South—map to hot spots of metal theft. In local news stories, law enforcement officers make the connection explicit. "Anytime you've got copper thefts, you've got meth problems," said Dakota County Sheriff Don Gudmundson in a September story in the St. Paul Pioneer Press. "One goes with the other." In one Detroit case, officers found a house full of stolen metal and several people living there. One man was shooting up when they found him and asked to finish before they arrested him. "We know drugs are the driving force," says Dunn, who is a retired commander of a narcotics unit in Texas. "I don't think people are stealing copper to buy groceries. I really don't."

More Than Collateral Damage

The link between addicts and metal theft also explains the irrationality behind some of the riskiest metal thefts and their consequences. Thieves may be dishonest, but they are also rational. A thief interested in making money isn't likely to break into a substation, because the risk of death is so high for a reward of only a few hundred dollars' worth of copper. And yet, substations are getting broken into constantly, and live wires are being cut, utility poles being climbed.

"Drugs hijack your motivational systems," NIDA's Frascella explains. "Motivation gets pushed so out of whack."

A crystal meth addict, whether high or craving a high, isn't rational about what constitutes risky behavior. He lacks judgment and can't control his motivations. "This habit removes all the inhibitions you normally have with scary environments, including dangerous equipment like an electrical substation," says Pete Jeter, lead physical security specialist at Bonneville Power in Oregon. This is scientifically true, according to Frascella, who notes that meth affects inhibitory parts of the brain.

Thus, stories of wildly risky metal thefts that lead to death are legion and often harrowing. "I had two fatalities in a 30-day period," Lane says. "Both were cutting wires off the pole. I think the first guy thought he was cutting a de-energized line. The second one is a real mystery, but who knows? We don't have a witness left."

"We had one in Kentucky up on the pole recently," Dunn says. "He cut the wrong wire, got wrapped up in the lines and just hung there upside down, dead, until someone passed by and noticed." Lynch in Detroit mentions "quite a few deaths recently in the city" including one electrocution when a thief was trying to steal live wires out of a traffic box.

In 2006, Jeter remembers, a man broke into a Clark Public Utilities substation and cut out copper grounding wires. Then he apparently bumped his head against a live wire, at which point he became the grounding wire. Seventy-two hundred volts coursed through him, and he burst into flames. The body burned for 45 minutes while engineers turned off the power and let the energy drain out, until it was safe to go in.

Scrap Man in the Middle

Solomon, owner of Solomon Metals, also president of the New England chapter of ISRI, walks the floor of his warehouse, past 2,500-pound bales of old copper wire, past carburetors compacted together, past barrels full of metal shavings and boxes overflowing with shiny cables, their color so unmistakably unique that it's got the same name as the metal: copper. Solomon's looking at something else, though. Thick industrial wire wrapped in gray insulation and wound around a plastic spool—the kind you'd find on a job site. "You see?" he says. "It could be an electrician who's done with a job and has no place to store the hundred feet of wire left on the spool, so he sells it for scrap."

Solomon is at the tail end of an impassioned defense of his industry, the scrap yards, which he, ISRI and others feel is served far too big a piece of the blame pie for the metal theft problem.

In fact, the scrap yards are kind of the hinge of the metal theft supply chain, the thing that connects the supply side, those stealing and selling scrap, to the demand side, those buying scrap to make it into the new metal. Because of this precarious position, CSOs, the police, copper manufacturers, everyone seems to point fingers at the scrap yards as the place to look for both the problem and the potential solution. An uneasy peace reigns between scrap dealers and security executives, especially at the utilities. While they work together, sharing intelligence on thefts and trying to enforce secure practices and awareness of the problem, both sides seem to think that the other could be doing more.

"The scrap metal industry is to some degree an illicit market," says Duke Energy's Lane. "You've got legitimate players, no doubt, but also a whole lot of illegitimate players." Lane's comments are echoed by others. A September 2006 article in the Long Island Business News on the topic called scrap yards "an ideal fence" for stolen metal.

Most security executives, like Lane, preface their comments about the scrap industry by saying they understand that most scrap dealers are honest. Jeter cites "extraordinary cooperation" between CSOs and scrap dealers. Lynch says some busts in his area have come from tips by scrap yards.

Usually, though, there is a "but." Lynch: But "some are operating on the fringes." Jeter: But "we're talking with county and federal prosecutors about enhanced legislation regulating the scrap industry." Assante: But "the scrap yards know much of what's coming in is stolen, and they buy it anyway."

Part of Solomon's rebuttal includes the fact that his company, like most reputable scrap yards, retains copies of IDs from sellers. It also does not pay cash for metal. ISRI has created a theft alert system so members know what metal has been reported stolen where. ISRI also has published recommended practices for avoiding stolen scrap and set up an awareness program with the National Crime Prevention Council.

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