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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More than all that, though, Solomon's rebuttal is the half-used spool of wire. "It's new wire, just like a stolen spool would be. How are you going to tell this from stolen wire? You're not. Wire is wire. Scrap metal is scrap metal. You almost have to go by the character of the person coming in." And even then, Solomon says, inside jobs are common. An employee of a reputable firm may show up, and the scrap dealer would have little reason to distrust him. Can the scrap yards be expected to figure out who's honest and who isn't? "We're not a policing agency," says Solomon. "I tell the security guys, you can't depend on us to be the gatekeeper. I tell them, if you don't want people to take the metal, you've got to start treating it like what it is—an asset."

He also tells them scrap dealers are victims too. Tons of metal is stolen from scrap yards, according to an article in ISRI's magazine, Scrap. In Georgia, 13 tons of used beverage cans. In Pennsylvania, 32,000 pounds of aluminum. More than 50,000 pounds of copper in Tennessee and Louisiana.

The problem, Solomon says, really is the 1 percent of disreputable dealers, "peddler shops," he calls them. No matter what controls scrap dealers put in place, it won't stop the theft, it just moves the transactions to these shops, to a grayer market. Solomon believes the finger-pointing at his industry stems from stereotypes of the scrap industry, which originated mostly from family-owned businesses like his (Solomon Metals was started by his grandfather 62 years ago). People assume they're all peddler shops, a bunch of shady operations.

Still, Solomon says he brought three security executives from utilities to the New England ISRI meeting in December. "We should be working together to fight the problem, not fighting each other. My message to the security industry is that the scrap industry is not trying to be the bad guy. We're doing what we can. We're caught in the middle here."

Beyond Awareness Programs

Of all the techniques DTE's Lynch has employed in Detroit to combat the metal theft epidemic there, perhaps the most effective has been an awareness program that in effect amounts to reminding the police to look up. "They're trained, you know, to look for criminals banging in doors," says Lynch who started the program in 2005. "We just say, look up in the air, and since then we've had more than a dozen arrests made on the poles. That's outstanding."

Awareness programs for citizens and police, of course, dominate CSOs' attempts to combat metal theft. Fliers. A media campaign. Meetings with police, city and state officials. Lynch has augmented these efforts with a rewards program—$1,000 for each useful tip. Dunn of American Electric Power has set up a hotline for reporting suspected thefts. Lane at Duke Energy also engages local sheriffs of South Carolina, reminding them of the laws that require dealers to record a legitimate ID for anyone selling more than 25 pounds of scrap. "We've seen times when they'll take a library card for ID," Lane says. "We're also trying to make sure the district attorneys know this needs to be prosecuted as a serious crime. We don't want them to plea-bargain out or dismiss the case." In Oregon, Jeter is doing the same.

Several CSOs at the utilities are working on lobbying programs at the state and federal levels that would link metal theft to terrorism through the fact that utilities are considered critical infrastructure. More severe penalties may stem the tide, but some argue that it's not the severity of the penalty that staves off crime, but rather the likelihood of getting caught, which remains low, especially in rural areas. Plus, penalties and chances of getting caught are risk propositions lost on the meth-fueled thief.

Another way CSOs have sought to win public support is to position metal theft as a public safety issue: Power outages disrupt local economies. Dangerously exposed live wires and ungrounded substations can harm or kill innocent passersby.

As for protecting the assets, CSOs are active there too. Lynch's site after the 38 breaking and entering cases was reinforced with an 8-foot corrugated steel wall trimmed with razor ribbon. So far, it has held up. Others are adding CCTV and intrusion detection systems (as are some scrap yards). But, "It's not practical to consider these measures as an answer," says Dunn. "These fences cost three or four times what a normal fence costs, and I've got 3,800 substations." Assante mentions "dedicated warehouses" that securely store metal, "but that's a lot of cost, and when work is localized, they want the metal [available], not waiting in some central warehouse."

Metal theft, then, has become another risk assessment project: Where are the most significant targets in which CSOs need to invest the extra capital in defenses?

CSOs have considered marking metal too. The ideas range from simply spray-painting the wire to using high-end tools to put microscopic signatures on the metal itself. But this, too, is expensive and it has limited application, they say. After all that marking, the most likely time a company would use it to identify its stolen metal is after it has been chopped up into scrap.

One of the most controversial proposals floated for controlling the metal theft market is a program called "tag and hold," words that make Solomon sneer. "We don't want to go into that," he says. In tag-and-hold programs, scrap yards tag incoming scrap with a unique ID and put out an all-points bulletin on contents of each lot. Then they hold the scrap for a week while the CSOs, investigators and police look for matches with reports of stolen metal.

Solomon is skeptical. "It's a good idea if you want to shut the scrap industry down," he says, noting that much of his metal moves through the yard in less than a week. Holding it not only would affect his ability to do business—what if prices changed while he was sitting on the metal?—but there isn't the space to hold it. It would be like stopping the middle car of a train while all the cars ahead and behind tried to keep going.

A $1,000 Drop in the Metal Bucket

Back in Detroit, behind the box store, Lynch completely douses the fire, and the thin man in the shiraz sweatshirt yells at him. But the man does not attack. Defeated, he simply walks away, and Lynch can't stop him. "My sense is he was using the proceeds for drugs," so he probably just wanted to move on to find more proceeds, Lynch says later. He let him go; he had pictures. He gave the pictures to the police who, according to Lynch, found the man and arrested him on suspicion of metal theft.

Lynch returned to the DTE Energy customer who had first provided the burn-site tip to grant him his $1,000 reward. He had given several of these checks before, the first of which went to a Detroit resident who noticed some guys climbing a pole. That tip led to their arrest. Lynch brought along a cameraman that time to capture the classic photo op. In the picture, Lynch beams. The tipster smiles. They shake hands. Lynch hands over the check.

But across the street, dead center of the picture, stands a crumbling house. The kind of house, Lynch says, where addicts go to get high, after they've stolen metal and sold it for the cash they need to buy ice. "Metal theft is the number-one issue for us," Lynch says. "With utilities, it's more pressing than terrorism or anything else. This issue, everyone is experiencing it."

E-mail Senior Editor Scott Berinato at sberinato@cxo.com.

Copyright © 2007 IDG Communications, Inc.

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