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Dirty cops involved in stolen metal scrap: Is this the future of rare earth metals and other recyclables?

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by Monica Davis

Metal recycling is big business.  Precious metal, rare earth mineral recycling is poised to explode, because China has more than 90 percent of known rare earth mineral reserves. The opportunity and dangers associated with this scarcity are foreshadowed by current illegalities, thievery and vandalism in the recycling industry, as thieves cut down cell phone towers and power generating towers to sell the stolen metal as scrap to unscrupulous scrap metal recyclers.

The corruption has drawn law enforcement personnel into its web, as is noted by Indianapolis news sources who reported that the areas largest metal recycling company was reportedly involved in a scheme to buy and sell stolen scrap metal.  The crime ring included city police officers. 


Omnisource And Their Dirty Cops Get Pass In Stolen Scrap Metal Scheme

The City’s largest scrap metal dealer hired dozens of your city police officers for off-duty police work, including cops whose job it was to investigate stolen scrap metal in this city. While its scrap metal yards purchased large quantities of stolen metal, the cops on its pay roll targeted other, smaller scrap metal dealers in town with sting operations to put them out of business. When a good cop finally started digging into the scheme, the shit hit the fan. The Ballard administration went into full spin mode and began reassigning police officers and making some rules changes to make it appear all was well within IMPD.

Here’s what really happened. OmniSource, the giant scrap metal dealer, hired Barnes &Thornburg attorney Larry Mackey to defend it. He’s the former campaign chairman for Carl Brizziand former law partner of then-Public Safety Director Scott Newman. He’s also an attorney for alleged Ponzi scheme operator Tim Durham, also a one-time major employer of off-duty cops at his Geist mansion. Mackey immediately fired off a letter to Brizzi and Newman demanding the firing or demotion of the lead investigator of his client’s scheme because he spoke too candidly to the media about the stolen scrap metal purchases made by their yards in Indianapolis.

What makes this story interesting is its implication for the future of the scrap metal industry, as it applies to recyclable rare earth minerals.  Right now, China has a lock on more than 90 percent of precious metal reserves.  Even if the United States finds more in US territory, it will take years for the mines to come on  line. SOURCE

Ultimately, the recycling and reclamation of rare earth metals is going to be big business.  Particularly if the Chinese continue their export restrictions on the metals.

 A rare earth  mineral mine in China has dug a massive trench around its property and hired security guards to ward off theft.,


China’s biggest rare earth miner has dug a massive trench and planted wire fences around a mine complex in north China in a bid to prevent theft of the minerals, says a company manager.

Baotou Steel (Group) Corp had dug a 56-km trench around the complex in Baotou, Inner Mongolia autonomous region, Liu Zhihong, director with the company’s planning and development department, said on Dec 10. MORE

Expert’s say part of the Chinese monopoly is generated by cheap labor and artificial prices.

These metals are not actually all that rare. But through a combination of cheap loans to its state-owned miners, as well as cheap labor and poor but cost-efficient working and environmental standards, China now supplies more than 95% of the global market. For example, the United States has some reserves but imports 87% of its needs from China. SOURCE

States which have closed rare earth mines, or have rare earth metal reserves are urging Congress to simplify the permitting process.  A Colorado newspaper editorial says:

When Congress reconvenes, we urge lawmakers to streamline the permitting process for opening new and shuttered rare earth mines. (Denver Post, 1-3-11)

With the increased price of copper, many items which earlier weren’t worth scrapping, have now turned into gold mines for amateur and industrial scrappers, as this blog entry notes:


Scrap transformers. Until not too long ago, these things would get thrown in along with shred steel. Now, because of the rising price of copper, transformers along with other types of copper breakage (motors, alternators, magnetrons ect) are slowly becoming more and more valuable.

Transformers effectively, are copper wires around a steel or ferrite core. The value of the transformer comes from the value of the copper.

Many yards will buy them at a special “Copper breakage” price, but that will not always get you the most bang for your buck: Let it be known that transformers out of microwaves have value to repairmen and DIY microwave owners. Some scrappers will save and sell this scrap metal online at auction for over 6x the scrap price. I usually find it to be a bit more hassle than I’m willing to handle.

Where to Find Scrap Transformers

  1. In Microwaves:  A microwave’s weight is comprised for the most part of copper breakage! There is a good sized transformer and a magnetron.

  2. In power supply boxes: Power supply boxes are a thing of beauty. They change the voltage, amperage, and often invert the electrical power being supplied to a device. Power supplies are commonly seen at the end of power cords, aka wall wart chargers pictured below at right. The computer power supply is pictured at left. It is much bigger, but has more than just a transformer in it. If your yard is a little more relaxed when it comes to copper breakage, they will take these. If not, then they will not.   SOURCE


With the economy in crisis, and rare earth metal in short supply, we have a perfect storm of economic and environmental forces creating huge opportunities for criminal and legitimate recyclers.  The Scrap Metal Blog also noted the 2010 annual  price increase.  Rare earth metals increased by 250%, with gold, silver and palladium ranging from 27 to 100 % increases in value.


Average Rare Earth Metals: +250%
  • Palladium: +100%
  • Silver: +80%
  • Nickel: +33%
  • Molybdenum: +30%
  • Copper: +29%
  • Gold: +27%
  • Platinum: +21%
  • Aluminum: +9%
  • Rhodium: +0%
  • Lead: +0%
  • Zinc: -4%

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