In Depth

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.

By Scott Berinato

Where 800 Pounds of Stolen Copper Goes

For Lane, metal theft is problem number one. "Matter of fact," he says, "this morning we arrested six guys in connection with a substation break-in." The men allegedly stole about 800 pounds of copper wire on one of those large wooden spools waiting to be used as electrical wiring at a Duke Energy construction site in Anderson, S.C.

Once a spool like that is stolen, thieves will cut the wire into 4- or 5-foot sections, effectively destroying the product for the owner. At that point, it's scrap. Then comes a crude burning process, usually throwing the wires directly into a fire. Burn sites, like the one Lynch found in Detroit, are reused. Lane says some thieves will coat the wires with oil or other accelerant, load them in a 55-gallon drum and drop in a lit match. Other times, oak wood is put in the bottom of a drum and sections of wire are dropped in like lengths of raw spaghetti.

That's what the six men Lane was talking about were allegedly doing when a patrol officer saw, and smelled, black smoke coming from behind a house outside of town, in an area suspected of metal theft activity. The men were charged with grand larceny, but Lane says finding them was luck.

Imagine if the police hadn't happened onto the scene. This is what might have happened: The thieves would have finished burning the insulation and hosed down the wires, piled the charred copper into a truck and headed for the scrap yard.

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.

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