Copper has lost over a quarter of its price from a year ago, but that steep decline has not affected black market demand for the red metal. If anything, copper theft continues to be a major source of anxiety, particularly for the construction industry, and legislators are still attempting to stop property vandalism. At the same time, public interest in recycling base metals for environmental reasons is only increasing, and is keeping up demand for recycled copper.
Last week, New York Democratic Senator Charles Schumer introduced the Metal Theft Prevention Act, which aims to stop thieves from procuring and selling stolen metal goods, and makes stealing metal from infrastructure a federal crime. The act also has stringent documentation requirements for sellers and record-keeping requirements for recyclers who buy scrap metal.
“The Syracuse Police Department [in New York State] has seen a 50 percent increase in metal theft over recent months, and this scourge has prompted me to take swift action and work with the Syracuse Police Department to make sure the only metal these criminals can get their hands on is in a locked jail cell,” Schumer said. “This proposal will safeguard Central New York families, schoolchildren, drivers and first responders who are endangered by the stripped infrastructure, fires, and financial hits as a result of these crimes.”
Copper prices have dropped nearly a dollar from a year ago to around $3.30 per pound, but that has not stopped vandals from trying to get their hands on the metal. Destruction caused by copper thieves stealing the metal from construction sites and public infrastructure, including railways and dams, is a global phenomenon. Some worried that the London Olympics might be put into jeopardy as a direct result of copper theft, in part because some train services have been cancelled due to thieves targeting lineside cabling.
“For British Transport Police, metal theft … is second only to terrorism in its list of priorities,” according to Britain’s Association of Chief Police Officers. The association estimates that metal theft has cost the British economy over 750 million pounds to date, and said that “[t]he government is clear that changing the law is the only sustainable, long term solution to tackling metal theft. So, from the autumn, new laws will make it illegal for metal recyclers, who are often the first port of call for thieves looking to make a quick buck, to deal in cash.”
The bill that outlines these changes was introduced in June by Conservative British MP Richard Ottoway, and is a replacement for the Scrap Metal Dealers Act of 1964, which currently governs the scrap metal industry. “I hope my bill will provide the strong legislative framework so desperately needed to empower our local councils and police forces in their fight against offenders who willfully plunder this country of metal, whilst also strengthening and supporting legitimate scrap metal dealers,” Ottoway stated.
In the United States, each state has its own metal recycling regulations, with varying degrees of stringency. For instance, since July of this year, scrap metal facility group Main Metal Recycling, located in Jackson, Florida, has required sellers to have a receipt or bill of sale when recycling burnt copper, insulated copper, catalytic converters, and other products.
Still, immediate financial gain is not the sole reason for the continued allure of the scrap copper market. According to the Copper Development Association, nearly as much copper is recovered from recycled material as is derived from newly-mined ore. Excluding wire production, which mostly uses newly-refined copper, 72 percent of all used copper comes from recycled copper, which is attractive to environmentalists as recycling one ton of copper saves 15 percent of the energy used in extracting and producing the same amount of virgin copper, thus cutting back on greenhouse gas emissions.
Recycling by-products from electronic devices such as computers and cell phones is fast gaining ground as a means to protect the environment and increase domestic jobs. The US Environmental Protection Agency reported that one metric ton of circuit boards can contain about 30 to 40 times the amount of copper mined from one metric ton of ore. Organizations including the Coalition for Responsible Electronics continue to press for the passage of the Responsible Electronics Recycling Act (HR 2284 and S1270), introduced by Texas Democratic Representative Raymond Green on the House side and by Rhode Island Democratic Senator Sheldon Whitehouse in the Senate. The bills include rules for the sustainable recycling of copper and other metals and call for a reversal of exporting metals overseas for resale on international markets on the grounds that doing so decreases export revenue and reduces domestic jobs.
While the price of copper has lowered from its peak, the red metal remains alluring to those in the black market even as lawmakers worldwide try to crack down on the trade. At the same time, the drive to be less dependent on new copper and to instead recycle the existing metal is likely to gain even greater steam.
Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.