Copper theft crisis: Gordhan reveals 4,633km of cable stolen in three years

In April 2023, scrap metal dealer Malome Matsetela was sentenced by the George Regional Court in the Eastern Cape to an effective 18 years in prison for copper theft, money laundering and racketeering after it was discovered that he sat atop an illicit copper syndicate.

It turns out this was not Matsetela’s first brush with the law, or with copper theft or infrastructure vandalism. In 2018, when Matsetela was the registered owner of Malvern Scrap Metal, he was sentenced to 18 years in prison in the Bloemfontein High Court for racketeering and the theft and vandalisation of infrastructure, though how he came to be back in business so soon after sentencing is not explained.

Transnational operation

Evidence led at the trial suggested that 11 of 18 copper theft syndicates investigated by the Southern Africa Revenue Protection Association sold their copper to Matsetela, proving that the syndicates operate across the country.

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His brush with the law goes back even earlier, as Matsetela had previously been sentenced to 12 years in prison on similar charges for offences committed between 2014 and 2015. He made close to R15 million over just a two-year period for his efforts.

“The Matsetela network used hired vehicles and trucks to carry out the thefts and to transport the stolen copper to Malvern Scrap Metal,” says a report into copper theft in SA, recently published by the Global Initiative Against Transnational Organised Crime (GI-TOC).

“They fitted the vehicles with yellow warning lights and wore reflective jackets to create the impression that they were road maintenance crews, and targeted Telkom, Eskom and Transnet overhead cables,” it adds.

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“After the copper was processed, it was sold to SA Metal Group in Johannesburg.”

Punishment to fit the crime?

Then there’s the case of Group Wreck, one of the largest metal recyclers in the Durban area. It reported an after-tax profit of R12.6 million for 2018.

The owner, Angelo Solimene, was bust in 2019 for exporting mixed copper and brass and falsely declaring this as unrefined copper. He was fined R500 000, half of which was suspended for five years on condition that he did not export any goods without the relevant permits. He also paid R600 000 to secure the release of his goods from customs.

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In case after case involving multi-million rand consignments of stolen copper, culprits are walking out of court with relatively trivial fines.

The GI-TOC report, entitled South Africa’s Illicit Copper Economy and authored by Jenni Irish-Qhobosheane, provides some chilling stats on the scale of the problem and the threat to critical national infrastructure.

“Every day in South Africa, criminal elements strip copper from wherever they can find it, including roads, homes, construction sites and mines. The theft of copper from already ailing infrastructure severely affects the capacity and operations of state-owned entities and municipalities,” says the report.

The issue of copper theft came up in parliament this week when, in response to a question from the Democratic Alliance, Minister of Public Enterprises Pravin Gordhan said 4 633km of copper cable had been looted between the 2020 financial year to the end of October 2023.

“I’m speculating, but this looks like we’re still paying the price for the Covid lockdown,” says DA public service and administration spokesperson Leon Schreiber.

“The trend [of copper theft] was already in evidence before then, but there seems little doubt that the lockdown accelerated this trend.”

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It’s not just the monetary cost of the stolen copper but the impact on railways, health, power generation, telecommunications, water supply and mining.

The staggering cost to the economy

Here’s how copper theft impacts key sectors of the economy:

Eskom: Copper theft is reckoned to cost R5-7 billion a year, plus another roughly R2 billion to replace stolen cables. That does not count the disruption of power supply to customers.

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Transnet reported 1 121km of cable stolen in the 2023 financial year, a nearly eight-fold increase over five years. That’s the distance from Joburg to Harare. The 1 121km stolen from Transnet in 2023 was a 26% improvement on the 1 506km stolen the previous year. The theft problem remained relatively mild until 2019 when things got out of hand. The number of cable theft incidents is nearly 4 000 a year.

Telkom reported 1 321 instances of copper theft in the five years to November 2022. In one year alone this cost the company R60 million and affected services to thousands of customers.

City Power in Johannesburg reported 2 000 incidents of cable theft in the 2023 financial year, and replacing them cost R380 million.

eThekwini in KwaZulu-Natal lost about R120 million to copper cable theft in the 2023 financial year.

Cape Town mayor Geordin Hill-Lewis said in 2022 that copper theft was a “monumental” problem that crippled infrastructure and cost R2 million a week just to repair street lights.

Copper theft at hospitals in Gauteng, Free State and the Eastern Cape caused critical disruptions to operating theatres, intensive care units and other facilities.

Mining: Thieves strip copper from power cables in underground mining tunnels with impunity. Sibanye-Stillwater reported 120 incidents of cable theft in 2021 and 45 incidents in the first quarter of 2022. Copper theft cost the company R1 billion in lost production in 2022.

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Mark Munroe, then head of Impala Platinum’s Rustenburg complex, said in a 2022 interview that every day there was at least one place that was not working on the complex due to cable theft. This theft poses a threat to the lives of miners, potentially shutting off underground services such as lighting and cooling systems and increasing fire and smoke inhalation risks.

Construction companies are having to beef up security, use motion detectors, and are now placing permanent guards on site to help prevent copper theft.

Billions in illicit sales

It’s reckoned 150 000 tonnes of copper scrap, valued at R10 billion, is traded legally each year of which about 13% is exported, but this could be a low-ball figure given widespread under-invoicing and mislabelling.

“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,” says the report.

The price for scrap copper wiring is R20-R60/kg depending on quality. Once it has been recycled and processed, it can sell for R140-R160/kg.

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Copper theft is not a new problem. Around 2010, one syndicate of Pakistani origin used shipping containers in remote areas as drop-off points for thieves, and then transported the containers to Durban for shipment abroad using false paperwork.

In 2023, the Hawks busted another syndicate using similar methods and operating outside the scrap metal sector with its own recycling and expert processes.

What to do

Copper theft in SA is a transnational crime with foreign buyers at the head of the supply chain, requiring an intergovernmental approach to curb its practice, says Irish-Qhobosheane.

Investigations and prosecutions should focus on the high-level players rather than those lower down the food chain, with better use made of existing legislation like the Second-Hand Goods Act, the Prevention of Organised Crime Act (Poca) and the Criminal Matters Amendment Act (CMAA).

The Poca is underutilised since it involves proving organised criminal activity, but where it has been used to prosecute copper theft, the state has been able to throw the book at culprits with additional charges of money laundering, running a criminal enterprise and racketeering, all of which carry hefty sentences.

One quick and easy win would be to prevent mislabelling of scrap copper as raw copper by demanding that raw copper exports only be permitted if they are certified by a South African copper mine.

Law enforcement needs to target bucket shops and informal traders and create an electronic database of registered dealers, and revoke registrations of dealers involved in copper theft – which appears not to be the case at present.

Another suggestion is to improve coordination between detectives and the National Prosecuting Authority, with the process overseen by high-level police personnel.

Unless SA starts to get serious about this problem and hunts down the top-level culprits, the country’s infrastructure may find itself for sale in China and India.

This article was republished from Moneyweb. Read the original here