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The Billion Dollar Copper Theft Industry


Copper's spike in price over the last decade has made the theft of the metal an epidemic.

For years now, the US has been plagued by an illegal industry driven by a reddish-brown industrial metal. Copper, one of the world's most popular and demanded metals, has been the subject of an underground movement that has created an incentive to steal. Thieves all across the country have been harvesting the metal in homes and highways, and other structures that are under construction; some even go as far as to steal the metal from already built establishments.

The Demand for Stolen Copper

The last decade has seen copper prices spike, as the commodity supercycle helped propel a number of hard assets to new levels. Approximately 10 years ago, copper went for 80 cents a pound on the CME, that price has now jumped to $3 a pound (during a period where prices actually touched $4/pound during the height of the recession). The chart below shows the price of copper over the last 25 years.

With all of the above information, it makes sense that those who can efficiently harvest this resource stand to make a pretty penny.

According to the National Insurance Crime Bureau, which tracks metal theft, "25,083 claims were filed from 2009 to 2012, compared with 13,861 from 2006 to 2008. Nearly 96 percent of the claims in the more recent period were for copper theft" writes Mark Koba. Those same statistics cited Ohio, Texas, Georgia, California, and Illinois as the states where the epidemic is the most serious.

Thieves are often able to sell the metal off as scrap to certain locations that tend not to ask too many questions, though some have tightened up their buying policy to ensure that it is within the confines of the law. The industry is estimated to be worth $1 billion each year.

Not All That Glitters Is Gold

While many may see an easy opportunity to go out and steal some copper wiring and scraps, few seem to calculate the risks involved. Aside from the legal ramifications, numerous people die every year simply from trying to harvest the commodity. More often than not the deaths are caused by electrocution when thieves trying to harvest the metal simply make the wrong move. Not only that, but the repair staff who must fix the damage is often put in peril.

Many also fail to think about the full impact of harvesting copper and copper wire. The process can often leave a number of homes without power and costs thousands of dollars to fix.

While this issue is most prominent in the US, there still seems to be a demand for it across the globe. In one of the more clever heists, an Australian man posed as a cable technician and ended up making off with over $110,000 worth of the metal after ripping off more than 400 houses.

Putting a Stop to the Issue

For years, states have been passing more and more legislation to ensure that the purchases and sales of copper remain legal. This not only assures the construction world, but it also ends up protecting would-be-thieves from meeting an untimely death, as it takes away the motivation and ease of stealing the metal.

A number of establishments are taking photos of each buyer as well as the copper that is purchased. This along with key identification information is what lawmakers and police are hoping will help tame the underground industry. At the same time, builders and other firms are taking steps to make lots more secure and some have even gone as far to use a copper-steel blend when possible, which has far less value than pure copper.

Unfortunately, at the end of the day the problem will be mostly dictated by copper prices. For as long as prices remain high, there will still be thieves willing to risk their lives to turn a quick profit. While legislation and increased security measures may slow the problem down, it seems that the only cure will be if prices can ever fall back to where they were just 10 years ago.

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Editor's note: This article by Jared Cummans was originally published on Commodity HQ.
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