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By Rose Ragsdale
For Mining News 

FBI cites rising threat of copper theft

Spurred by strong global demand for metal, thieves imperil critical U.S. infrastructure; target Alaska's Pogo gold mine

 

Last updated 1/25/2009 at Noon



Growing numbers of thieves are seeking out vulnerable public and private structures for easy sources of lucrative copper used in wiring and other products for relatively quick and anonymous sales.

The theft problem is getting so bad that communities across the country are encountering not only economic but also public safety dangers.

A recent Federal Bureau of Investigation assessment highlighted the impact of copper theft on critical infrastructure nationwide. Through May 2008, the federal law enforcement agency reported copper thefts are occurring throughout the United States that are "perpetrated by individuals and organized groups motivated by quick profits and a variety of vulnerable targets."

Prepared by the Criminal Investigative Division of the FBI, the assessment found that strong demand for copper from developing nations such as China and India, along with several other factors, has spurred copper theft dramatically. Copper thieves are exploiting worldwide demand for the metal and the resulting price surge by stealing and selling copper for high profits to recyclers across the United States.

Recycled copper was selling for about $1.50 a pound last year when the FBI drafted the assessment.

Thefts threaten public safety

The agency said the thieves are threatening critical U.S. infrastructure by targeting electrical substations, cellular towers, telephone land lines, railroads, water wells, construction sites, and vacant homes for lucrative profits. Copper thefts from these targets have increased since 2006; and they are currently disrupting the flow of electricity, telecommunications, transportation, water supply, heating, and security and emergency services, and present a risk to both public safety and national security.

The FBI said copper thieves are typically individuals or organized groups who operate independently or in loose association with each other and commit thefts in conjunction with fencing activities and the sale of contraband. Organized groups of drug addicts, gang members, and metal thieves are conducting large scale thefts from electric utilities, warehouses, foreclosed or vacant properties, and oil well sites for tens of thousands of dollars in illicit proceeds every month, the agency said.

For example, highly organized theft rings specializing in copper theft from houses and warehouses reportedly struck Minneapolis, Minn., in April.

These rings or gangs hit several houses per day, yielding more than $20,000 in profits per month.

The targets were most often foreclosed homes, the FBI said.

A report in March indicated that an organized copper theft ring used the Cuyahoga County Sheriff's foreclosure lists to pinpoint targets in Cleveland, Ohio.

Perpetrators had 200 pounds of stolen copper, road maps, and tools in their van.

Three additional perpetrators were found to be using the U.S. Department of Housing and Urban Development's list of mortgage and bank foreclosures to target residences in Cleveland, South Euclid, Cleveland Heights, and other cities in Ohio.

Among other anecdotal evidence, the FBI cited:

The agricultural industry reported in March 2007 that farmers in Pinal County, Ariz., experienced a copper theft epidemic as perpetrators stripped copper from their water irrigation wells and pumps, resulting in the loss of crops and high replacement costs. Pinal County's infrastructure loss due to copper theft totaled $10 million, according to the report.

In March, nearly 4,000 residents in Polk County, Fla. reportedly were left without power after copper wire was stripped from an active transformer at a Tampa Electric Co. power facility. The FBI said a transformer contains about 50 pounds of copper with the potential to yield $200 for copper thieves and if stolen, result in thousands of dollars in damages, replacement costs, and environmental cleanup. Monetary losses to the Tampa utility totaled about $500,000.

A few weeks later in April, five tornado warning sirens in the Jackson, Miss., area reportedly failed to warn residents of an approaching tornado because copper thieves had stripped the devices of copper wiring, thus rendering them inoperable.

Copper thieves hit Pogo mine

Though most mining operations have been unlikely targets for copper thieves, the Associated Press Jan. 9 reported that a former truck driver pled guilty to stealing more than $50,000 in copper wire from the Pogo gold mine near Delta.

Forty-five-year-old Mark Garwood entered the guilty plea in early January as part of a deal. Prosecutors lowered the count from first- to second-degree theft in exchange for Garwood's plea.

Assistant District Attorney Ben Seekins told reporters that Garwood is assisting the State of Alaska in its investigation and has agreed to testify against co-defendant Simeon Staley.

Pogo Mine officials became suspicious of the men in March after copper wire and other items, including tires, began disappearing. Alaska State Troopers said Staley, a mine worker, is suspected of loading the copper and other items onto a semi operated by Garwood, who worked as a truck driver for a contractor.

The first-degree theft case against the 25-year-old Staley is pending.

Global demand drives trend

Law enforcement officials say China, India, and other developing nations are driving the demand for raw materials such as copper. An October 2006 report indicated that the demand for copper from China increased substantially due to construction of facilities for the 2008 Olympics.

The FBI also cited higher prices, noting that the price of copper leaped more than 500 percent between January 2001 and March 2008, according to its sources.

Several isolated events in recent years also have contributed to global copper production shortfalls, including a landslide in October 2003 at the Freeport-McMoran Copper and Cold mine in Grasberg, Indonesia and a worker's strike at the El Abra copper mine in Clama, Chile in November 2004. The FBI said these events contributed to copper production shortfalls and led to an increase in recycling, which in turn has helped create a robust global market for copper.

The FBI said the unusually favorable market conditions have prompted unscrupulous and sometimes unwitting independent and commercial scrap metal dealers to pay record prices for copper, regardless of its origin, making the material a more attractive target for theft.

Copper thieves have cashed in on the trend by selling the stolen metal to recyclers who often fill orders for commercial scrap dealers. Recycled copper flows from these dealers to smelters, mills, foundries, ingot makers, powder plants, and other industries to be re-used in the United States or for supplying international raw materials demand, the FBI said.

"As the global supply of copper continues to tighten, the market for illicit copper will likely increase," the agency concluded.

Agency offers troubled outlook

The global demand for copper, combined with the recent economic recession and home foreclosure crisis, is creating numerous opportunities for copper-theft perpetrators to further exploit copper-rich targets. The FBI said organized copper theft rings may increasingly target vacant or foreclosed homes as they are a lucrative source of unattended copper inventory. More than 3 million homes across the country are now in foreclosure, according to a recent report from the National Association of Realtors.

"Current economic conditions, such as the rising cost of gasoline, food, and consumer goods, the declining housing market, the ease through which copper is exchanged for cash, and the lack of a significant deterrent effect, make it likely that copper thefts will remain a lucrative financial resource for criminals," the FBI said.

Industry officials also have taken some countermeasures to address the copper theft problem. These include the installment of physical and technological security measures, increased collaboration among the various industry sectors, and the development of law enforcement partnerships.

Many states are also taking countermeasures by enacting or enhancing legislation regulating the scrap industry - to include increased recordkeeping and penalties for copper theft and noncompliant scrap dealers. However, the FBI said there are limited resources available to enforce these laws, and a very small percentage of perpetrators are arrested and convicted.

As copper thefts are typically addressed as misdemeanors, the individuals that are convicted pay relatively low fines and serve short prison terms, the agency added.

 

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