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October 23, 2013

Copper theft has tripled in the U.S. over the last five years.

By Edward Gresser

THE NUMBERS: Reported thefts of copper* –

2010-2012: 32,568
2006-2008: 13,020

* From National Insurance Crime Bureau, calculated by total claims filed for significant copper thefts. The 2006-2008 figures are from Jan. 2006 to November 2008, while the 2010-2012 are full year for all three, so the 2006-2008 three-year total would be slightly higher, perhaps 13,390 given average monthly theft rates at the time.

WHAT THEY MEAN:

A weird story from the October 1st edition of the Daily Cal (UC-Berkeley’s student newspaper):

UC-Berkeley received national media attention Monday night following a bizarre series of events that culminated with an explosion near California Hall and the swift evacuation of campus. By midnight the campus was eerily dark, empty except for the flashing lights of fire engines and the haze of lingering smoke. … The explosion appears to be related to vandalism discovered by the campus late last week, [University press officer Dan] Mogulof said. Vandals were stealing or attempting to steal copper grounding from an electrical system not readily visible, and the damage appears to be more extensive than initially believed.

Why rip wire out of a live generator? Well, as a direct answer, stealing copper brings in a lot of money. A more basic point: global trends in commodity markets, ultimately traced back to the China boom. The background –

As China lays high-speed rail track, builds 1500-foot skyscrapers, and launches aircraft carriers, it pulls in metal from all over the world. China’s share of global metal imports, 10 percent a decade ago, is now above 30 percent. This is iron ore from Australia’s western desert and steel scrap from Haiti, zinc from Peru and Bolivia, nickel from Canada and Indonesia, and so on. Chinese copper consumption has jumped too, from 2.8 million tons in 2002 to 8 million tons in 2012, and imports have risen from 620,000 tons to 4.4 million tons. Some of this extra metal comes out of the ground, as world mining output rises to meet demand. Each year the world’s copper-mines now produce 17 million tons of copper, up from 14.5 million tons a decade ago. But mining production can rise only slowly, and until output adjusts to demand, prices rise; priced at $0.70 per pound in 2005, copper now costs $3.00 per pound. Thus a big incentive to find more metal.

Now back to the United States: With high prices and eager overseas buyers, American copper exports have risen sharply – from 0.8 million tons in 2002 to 1.2 million tons in 2009, and 1.65 million tons in 2012. Though exports are a bit off this year, copper seems likely to be a product that reaches the National Export Initiative goals of doubling exports in 5 years. But mining isn’t the reason; the U.S. Geological Survey finds American copper-mine output pretty stable at about 1.2 million tons a year over the last decade. Most U.S. copper export growth is in “waste and scrap” rather than ores or refined metal, and some of this is virtuously recycled stuff. But a 2008 report from the FBI angrily pointed out that a lot of it isn’t:

“Copper thieves are threatening US critical infrastructure by targeting electrical sub-stations, cellular towers, telephone land lines, railroads, water wells, construction sites, and vacant homes for lucrative profits. The theft of copper from these targets disrupts the flow of electricity, telecommunications, transportation, water supply, heating, and security and emergency services and presents a risk to both public safety and national security. … The demand for copper from developing nations such as China and India is creating a robust international copper trade. Copper thieves are exploiting this demand and the resulting price surge by stealing and selling the metal for high profits to recyclers across the United States. As the global supply of copper continues to tighten, the market for illicit copper will likely increase.”

In statistical terms, the National Insurance Crime Bureau’s systematic analyses find that five years after the FBI’s warning, copper-theft incidents have tripled to 11,000 a year, with targets ranging from churches and soup kitchens to abandoned homes, construction sites, mines, and of course electric generators. A year-old Los Angeles Times story gives the numbers some color and life (and explains how a large-scale gang gets stolen copper out of the country) as it recounts a copper-seizure at the Port:

“U.S. border enforcement agents and the Arizona Department of Public Safety said Tuesday that an investigation into the September theft of copper from a mining facility in Hayden, Ariz., has led to the recovery at the Port of Los Angeles of 144 tons of stolen copper ingots about to be shipped to China. Worth $1.25 million, the ingots are unrefined copper that contain traces of gold and silver and weigh 806 pounds apiece. The 359 ingots were covered with a black powder-like substance which camouflaged their true color, according to investigators. Arizona authorities said they got a lead on the thieves as a result of a commercial vehicle traffic stop and search warrant on a residence. Officers seized copper in excess of $300,000, three truck tractors, three semi-trailers, one forklift and two handcarts. [P.E. note: Packed in nine shipping containers.]”

Returning now to the Berkeley explosion, Ohio and Texas suffer the most copper thefts in absolute numbers; relative to population, your land-line and gutters are in greatest danger if you live in Rhode Island or Delaware. (If you’re in Alaska, Hawaii, Montana, or the Dakotas, you seem relatively safe.) California’s per-capita level of copper-theft is fairly low – the NICB reports 40 claims per 100,000 people filed over the last three years, placing the state 40th out of the 50 states plus Washington, DC. But if Bay Area thieves have been reduced to tearing wire out of live generators, perhaps California’s modest theft rate just means that all the ‘low-hanging metal fruit’ is already gone.

FURTHER READING:

Copper theft explained –

The Daily Cal on the Great California Hall Explosion of 2013: http://www.dailycal.org/tag/explosion/

The U.S. Geological Survey on U.S. and world mining, smelting, refining, and buying of copper: http://minerals.usgs.gov/minerals/pubs/commodity/copper/

The FBI on copper theft, 2008: http://www.fbi.gov/news/stories/2008/december/copper-theft-intel-report-unclass

The National Insurance Crime Bureau on metal theft trends from 2010 to 2012, with figures by metal and by state: https://www.nicb.org/newsroom/news-releases/2013-metal-theft-report

And the LA Times on how to, almost, get a few hundred tons of stolen copper out of the country: http://latimesblogs.latimes.com/lanow/2012/11/china-bound-stolen-copper-seized-at-the-port-of-los-angeles.html

And some international context –

America’s copper-theft epidemic is not an “American” or even an unusual phenomenon. A quick Monday morning Google search for the phrase “copper theft” turns up 3,080 stories from the last month. Some examples –

Slavkov, Czech Republic – Thieves dismantle and drive off with a 15-foot bridge: http://www.telegraph.co.uk/news/newstopics/howaboutthat/9235705/Czech-metal-thieves-dismantle-10-ton-bridge.html

London, U.K. – Church of England loses 10 million pounds a year to theft of copper and lead from roofs, pipes, and gutters: http://www.telegraph.co.uk/news/uknews/crime/9126648/Metal-theft-costs-Church-of-England-10-million.html

Dardanup, Western Australia – Tons of lead and copper stolen from a ‘disused abattoir’: http://www.perthnow.com.au/news/western-australia/police-investigate-copper-thefts-in-the-south-west/story-fnhocxo3-1226730732561

Johannesburg, South Africa – International flights from Johannesburg Oliver Tambo International halted after theft of airport power-cables: http://www.enca.com/south-africa/saps-investigates-or-tambo-cable-thefts

Kingston, Jamaica – Telecom provider LIME loses its cables: http://jamaica-gleaner.com/latest/article.php?id=48396

***

Special note, again on currency: Trade Fact subscriber SC points out that our calculation of annual currency exchange, though not arithmetically wrong, rested on a premise with a sort of obvious flaw. Using the Bank of International Settlement’s 2013 estimate of $5.4 trillion in daily currency, we reached an annual estimate of $1.8 quadrillion. In fact, of course, the currency markets aren’t open all week. So a reasonable total estimate might not be 365 x $5.4 trillion = ~$1.8 quadrillion, but 250 x $5.4 trillion = ~$1.4 quadrillion. Sorry! Total still easily in the quadrillions, though.