In our new two-part mini series, we consider the devastating effect of the relentless theft of copper on South Africa’s infrastructure, and the consequent burden such theft places on the country’s economy and society – important topics to consider in this election year. Part one sets the scene as it stands currently, and part two details the ways in which the situation is being addressed, including legislation, law enforcement efforts, and international co-operation.
South Africans are all too familiar with the daily theft of copper cables and other items from infrastructure meant to sustain development and contribute to the smooth running of the country. They would be mistaken, however, to think it is only petty thieves who are responsible.
South Africa’s Illicit Copper Economy, a research report released in December 2023 by the Global Initiative Against Transnational Organized Crime (GI-TOC), reveals how copper theft has been allowed to proliferate to the extent that the capacity and operations of state-owned entities and municipalities are severely threatened, and social and economic growth are all but crippled.
The same organisation’s Strategic Organized Crime Risk Assessment report for South Africa, released in September 2022, concluded that the country’s infrastructure is at a tipping point, with copper theft identified as a contributing factor. That earlier report delves into fifteen interconnected illicit markets which are, it says, driven by a “complex and evolving” criminal underground. These markets range from illegal firearms, wildlife crime, and kidnapping to illicit drugs, illegal mining, and organised corruption.
“Organised crime is an existential threat to South Africa’s democratic institutions, economy and people,” the Risk Assessment report notes.
Corruption plays a big role in the growth of illicit copper networks and markets, says the Illicit Copper Economy report. “This can range from employees using their access and position to facilitate the theft of copper, to employees or security officers being paid by syndicates to provide information or, in the case of security officers, to assist criminal actors in safeguarding their operations.”
Many syndicates involved in copper theft use corrupt actors within the criminal justice system, the report adds, to protect themselves from detection and prosecution.
Other participants in the illegal activity include employees of utilities, state-owned enterprises (SOEs), companies, and subcontractors.
Supply and demand
Although the copper theft problem existed long before then, a surge in the global copper price between April 2020 and June 2021 saw the commodity price more than doubling. This fuelled an “unprecedented spike in copper theft across South Africa’s networks which saw hundreds of kilometres of copper cable stolen”.
Copper thieves largely fall into two categories – organised crime syndicates who commit large-scale theft, and petty or subsistence thieves who steal only what they need, although the Risk Assessment report notes that syndicates do use these individuals to steal copper cables and pipes and other items.
The sought-after metal is widely used in a range of sectors, including water, rail, fuel and oil, communications, electricity, military, health, vehicle production, and more. Consequently, there will always be a market for it, and thieves find ready sources of the metal in South Africa’s poorly maintained and guarded national infrastructure.
“Every day, huge quantities of copper cable and other crucial metal components are stripped out of the country’s railways, electricity grid, and communications network, severely hampering capacity and operation,” the Risk Assessment report states. “Thieves have also targeted diesel and petrol pipelines, and water infrastructure, while corruption has eroded capacity across key utilities.”
This unchecked plundering puts the country’s National Infrastructure Plan (NIP) 2050 at risk, because infrastructure crime delays project delivery.
Phase two of the NIP 2050 talks about the effect of crime and corruption on infrastructure delivery, maintenance, and use. It specifically highlights copper theft, saying that the economic impact on South Africa’s rail and electricity networks alone was more than R45-billion in 2021/2022, owing to replacement costs, lost revenue, and other costs.
This assessment does not even take into account the economic cost in the numerous other sectors affected by copper theft.
The total cost of copper theft, the NIP 2020 phase 2 postulates further, could exceed 1% of GDP annually, imposing an enormous financial burden on the taxpayers who largely foot the bill. “Most of the costs of infrastructure-related crime are borne by society rather than the owners of that infrastructure,” the NIP 2050 Phase 2 notes.
Mind-boggling numbers
SOEs such as Transnet, the custodian of the rail and fuel networks, report theft-related numbers that boggle the mind. “In the 2021/22 financial year, the SOE experienced more than 5 500 incidents of copper cable theft involving over 1 500 kilometres of cabling, and while the number of incidents declined significantly in 2022/23, to 3 877, the company still lost more than 1 121 kilometres of cabling,” the Illicit Copper Economy report states.
Mismanagement and carelessness have cost Transnet dearly in many respects. The entity incurred a financial loss of R1.6-billion between March and September 2023, and its books show a disturbing R128.9-billion debt, consisting of R65-billion in short-term and R63.8-billion in long-term borrowing. In 2022 during the same period it recorded a profit of R159-million, a small sum compared to the vast scale of its operations, but a profit nonetheless.
At Telkom, meanwhile, 1 321 instances of copper cable theft were recorded between January 2017 to November 2022, resulting in costs of more than R60-million in 2020/2021.
In the water sector, copper cables, pumps, pipelines, fittings, and maintenance hole covers are stolen regularly, putting the safety of the system and its users at risk.
On the mining side, copper theft in 2022 cost Sibanye-Stillwater’s platinum group metals operations more than R1-billion in production.
Copper markets
The legal copper market is valued at about R10-billion annually, and the metal is sold largely locally and to a smaller extent exported.
The illegal market is much harder to quantify because of its very nature but, says the Illicit Copper Economy report, “it appears more is exported than in the legal trade. Scrap dealers often melt stolen copper down into ingots or granules, which until recently did not require an export permit. Alternatively, buyers may destroy any identifying marks before reselling the product on the domestic market”.
Domestically, some stolen copper is reprocessed and laundered back into the legal market, making it hard to track and trace the metal.
“There are allegations that some scrap metal dealers go so far as to tender or quote to supply copper on the legitimate market, and then commission thieves to acquire the quantity needed to meet their requirements. Smaller amounts of stolen copper are recycled and sold on the informal market, particularly in construction and vehicle repairs, and there are claims that it is used by people involved in illegal electricity connections.”
But it’s when exporting stolen copper that criminal syndicates and organised crime come into play in a big way.
“Some scrap metal dealers or recyclers involved in the illegal export market are part of sophisticated networks with links to foreign agents, local forwarding and clearing agents, and international buyers.”
These networks often overlap with other criminal sectors, such as the illegal firearms network which supplies the weapons used by thieves, criminals being paid in drugs, and gangs who run copper theft enterprises.
Stolen copper is often moved out of the country using the very same routes as those used by the legitimate market. Both land borders and ports may be used as exit points, but the harbours appear to be the more popular option, “with Durban and Cape Town being key smuggling hubs”.
Customs fraud involving mislabelling and the use of false documentation are common practises. In some cases, scrap copper is labelled as raw copper – this may happen in the legitimate trade as well.
“In other cases, illegal scrap copper is mislabelled as non-metal goods, such as textiles, and then exported under the corresponding codes.”
A lack of capacity to police the ports adequately means that containers often leave the country without being properly inspected, says the report, making it relatively easy for dealers to export mislabelled goods and get away with it – literally.
The biggest recipient of both legitimate and stolen copper from South Africa is China, the world’s largest consumer of that metal.
Look out for part two of our copper theft mini-series, in which we examine the measures currently in place to address the problem.
