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Scrap metals: A billion-dollar industry : Copper theft on the rise

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The saying that one man’s waste is another man’s treasure certainly applies to the scrap metal business. That discarded metal gate, the mangled steel from a torn down commercial building and rejected air condition units are major components of a scrapyard. Trinidadians came to know all too well how big the scrap metal business is from burgeoning scrap operations along the eastbound lanes of the Beetham Highway. Those operations were grounded late last month when the Engineering Battalion of the Defence Force removed scrap metals from at least five yards at Beetham Estate, over reports of illegal gun-making from scrap metal activity.

Chief of Defence Staff Brigadier Kenrick Maharaj said said the army had up to August 30 seized 32,280 kilogrammes of scrap iron throughout T&T. Make no mistake: the scrap metal trade is big business. Let’s start with some local figures. Unofficial figures obtained from the Port of Port-of-Spain on Monday indicated that between July and August, 2011, local scrap metal dealers exported about 800 tonnes of scrap iron in 40-foot containers, mostly to India, China, Taiwan, Indonesia and Brazil. In April, The Economist said that its index of metals prices hit a crisis-time low at the beginning of 2009. It has since risen by 160 per cent, and is now approaching its March 2008 peak. The prices of some of the commodities in the index, which excludes precious metals, have risen even faster. That of copper, for example, has risen by 236 per cent since it bottomed out, driven largely by galloping demand in China and India.

Overall, the scrap industry processes more than 145,000,000 short tonnes (129,464,286 long tonnes; 131,541,787 tonnes) of recyclable material each year into raw material feedstock for industrial manufacturing around the world. Wikipedia stated that in 2007, the United States exported more than US$10 billion worth of scrap steel. When the 2008 recession hit the market, the scrap metal price dropped from US$700/metric ton to US$250/metric ton, due to the fact that the recession slowed down the economy and reduced companies’ demand for raw material. On the other hand, the supply of scrap metal also decreased because people want to hold onto big-ticket item longer. As a result, a shortage of iron and steel scrap has inflated its value by 70 per cent in the past year.

At the same time, China and other emerging market have increased their demand for scrap, further raising the price. Now the price of scrap metal has rebounded to about US$400/metric ton. Given that Trinidad scrap metal dealers are exporting in the range of 800 tonnes within a two-month period, that works out to US$320,000. That means scrap dealers are making US$1.920 million for the year or TT$1 million for the month. According to the London Metal Exchange, “Due to the fast growth in industrialisation, natural resources are diminishing. Scrap and recycling alleviate a lot of the pressure. This is evident in the fact that some ten million tonnes of scrap metals are imported into Shanghai annually,” says James Po, chief executive of Terra Nostra, which has stakes in two Chinese copper and stainless steel joint ventures.

“The Chinese government is in favour of recycling; they understand the benefit of preserving the environment and its natural resources,” adds Po. He believes China’s developing automotive industry could help domestic scrap processing to rival or surpass that of the United States, whose scrap industry is valued at US$250 billion annually. Shanghai, China, will be hosting the World Scrap Metal Congress 2011 from November 1 to 4. Global scrap metal recyclers, traders and industry stakeholders are expected to link up with China and Asia’s leading metals manufacturers for the four-day event.

Regional scrap metal trade

Within the last three months, three Caricom countries-Jamaica, The Bahamas and Guyana-have banned the scrap export trade. Jamaica’s Industry Minister Christopher Tufton announced on July 29 that cabinet had decided to place an indefinite ban on the scrap export trade as a result of widespread theft across the island. The practice, Tufton said, had cost the Jamaican government and the private sector around US$11.7 million over the past three years. “Railway lines, water pipes, telephone cables, bridges, road signs, gates, and even handles from exhumed coffins were vandalised by scrap metal thieves to sell to rogue dealers for export,” Tufton said. He said said industrial scrap had been a major part of scrap metal exports with major companies, such as: Caribbean Cable, LIME, Jamaica Public Service Company, Jamaica Railway Corporation, Caribbean Cement Company, sugar factories as well as bauxite companies, have suffered from vandalism because of the scrap metal trade.

The next day, The Bahamas government announced it was placing a 90-day ban on the export of scrap metal and that it would meet with the country’s legitimate scrap dealers to agree on a process of certification to permit and accommodate the legitimate trade in scrap metals. In the same statement, the authorities in Nassau listed a slew of consequences that have resulted from metal theft, particularly copper theft, including the loss of broadcast ability in the southern Bahamas for up to a month, the loss of manhole covers by the country’s Water and Sewerage Commission and other private sector complaints of loss of revenue on account of copper theft. Like in the rest of the Caribbean, Guyana’s telecommunications, electricity and sewerage and water sectors have suffered considerable losses at the hands of metal thieves.

The Guyana Telephone and Telegraph Company’s insulated copper cable has been a prime target for thieves. In July, the Institute of Scrap Recycling Industries (ISRI) released the outcomes of a study highlighting the significance of the economic impact of the scrap trade in the US. The analysis provided by the study industry indicates that scrap recycling in the US accounts for more than 450,000 jobs, a relatively small number for the US. However, the study said that apart from the fact that the scattered nature of the industry means that it provides jobs for people across the country, it also generates around US$10.3 billion in tax revenues for governments across the country while making old things new again.

Research has shown that it has become one of the fastest growing crimes in the US. Copper theft, for example, includes gutters, flashings, downspouts, water lines and electrical wiring, all of which can be quickly stripped from abandoned buildings, industrial facilities, commercial buildings and construction sites.

Air conditioning units are particularly attractive, and are often tampered with or stolen for their copper coils and pipes for a huge profit. In the United Kingdom, ever rising demand has driven metal thieves to target copper signals and power cables from the country’s railway network. This development has led to the authorities mounting a major police operations using helicopters and a specially adapted “quiet train,” thermal imaging equipment, motion detectors, police dogs and motorcycles in a bid to nab the culprits.

Source Guardian

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