Commentary: Cat burglary and other forms of theft

The precious metals markets are up, and so are the incidences of stolen catalytic converters. It is all over the news. The BBC recently reported that catalytic converter thefts have doubled in England as metal prices have risen.

If you are a recycler, this is not news to you. At United Catalyst Corp., Greenville, South Carolina, we are seeing recyclers send smaller lots more frequently to reduce the risk of theft and move the converters quickly.

If you have been the victim of stolen converters, there is nothing worse than finding your converters have been sold to a converter collector down the road or to a processor. The problem needs a solution from both sides: the recycler and the processor.

Safeguard your cats

Being from Massachusetts, it easy to quote Bill Belichick: “Do your job.” But, because so many of you are not New England Patriots fans, let me throw a few other quotes at you. Ben Franklin said, “An ounce of prevention is worth a pound of cure” regarding fire safety. In Full Metal Jacket, Gunnery Sergeant Hartman says to Private Gomer Pyle about theft from his unlocked footlocker, “If it wasn’t for [expletive] people like you, there wouldn’t be any thievery in this world.”

You must do everything in your power to stop the theft of your catalytic converters, which, in short, means you need to think like a thief.

Over the past 30 years, we have seen some creative converter storage solutions in yards. The most original might have been in Vermont. A recycler took an empty 2,000-gallon tank and dropped the converters in the top like a piggy bank. He dug a moat around it. When it was time to get the converters out, he took the loader and dumped them out. Sound crazy? It was effective.

A more common solution is buying an ocean freight container to store the convertors in. One recycler we recall had an alarm and video surveillance on his container. One weekend, he broke into it himself to see how long it would take the police to get there. If it had been a real robbery, the converters likely would have been gone. At least you would have the video of the theft. However, a deer cam will not cut it. That will only snap a picture every time someone walks by. You need a good surveillance system.

Remember, nothing beats you and an employee that you trust walking the perimeter of the property looking for tall grass that can conceal an intruder or a hole in the fence through which a thief can gain access to the yard after hours.

Another way to safeguard against theft is knowing your count and secretly marking your cats. If your cat count is consistently short when you sell, start marking them in a way that is known only to you. Pick a color each week or month and spray inside the cat. If someone takes your converter and tries to come back and sell it to you, you’ve got them.

If you are selling by the piece, never say to the converter company, “You know where they are.” That is license to steal. Never let the company put the halves on the truck until you inspect them. If a converter is worth $300 and it’s three-quarters full, why would you take half price when the guy is going to sell it as full? If you have an employee overseeing the sale, make sure to show up at the beginning and toward the end of the sale. Stay until the transaction is complete and the payment is made to avoid your employee receiving a kickback from the converter company. If you introduce a new converter company to your yard and your employee objects or is hostile toward the new company, it is possible he or she is getting a kickback. Many employees might not consider this stealing but rather getting their piece of the pie.

Bottom line: Be meticulous about safeguarding your valuables by using locks, video, counts and personnel you can trust. The primary responsibility lies with you.

Hold collectors and processors accountable

When it comes to buying stolen converters, collectors and processors need to do their parts to research and know their customers. Bad actors must be eliminated from this industry. Companies and associations must refuse to do business with such criminals. If the good players in the supply chain would scrutinize the suppliers and refuse to purchase conflict material, we could stop the underground movement of stolen material into refining.

Stop losses with assay-based selling

If you finally made the switch from selling your converters by the piece to selling them on assay, you might have found that it is totally worth it. Your average cat sales likely are up 5 percent to 45 percent, depending on how you were being treated by your buyer.

Now you are in the real game: refining. You’re selling your converters based on the actual value of the three metals they contain. You are hedging and selling metal into the market. Sure, you might have to wait a little longer for your money, but with an early payment and the balance in 30 to 45 days, you are ahead of the game with more money toward your bottom line.

With assay, what could go wrong when you are selling on science and getting paid on actual metal markets?

For nearly 30 years we have been processing scrap catalytic converters for refining at United Catalyst Corp. Let me explain what can and does go wrong. And, more importantly, how you can fix it.  

Know your counts and weights

In converter processing, everything begins and ends with counts and the weights of your lots, converters, pallets, shrink wrap and all. We begin with the end in mind. Bill of lading weights must match. Unit counts must match what you sent in. All weights in and out of the converter processing facility should be accounted for and balanced.

If you are missing weight, you’re missing money. But if you are missing dust, you are missing significantly more money. The dust has the highest concentration of the platinum group metals, or PGMs. The dust might be 1 percent to 3 percent of the weight of the load while being 10 percent to 20 percent of the value. Therefore, we suggest letting those with expert systems decan for you. After ensuring the account is accurate, the decanning system is paramount to getting paid the correct amount.

In-house sampling is a guide

Did you know that when you sell on assay and refining terms that you are settling on the results of a sample of your load? After decanning the converters, the catalyst must be milled into a powder and a representative sample must be taken to be tested. That sample is only 5 percent to 10 percent of your material, so it had better represent all your converters. Sampling is a science. The first analysis using X-ray fluorescence (XRF) is only plus or minus 10 percent accurate. That could be a 20 percent swing in price! The final analysis is another scientific process. You do not want to get paid on XRF. Do you know if you are getting paid on XRF?

There is no short cut to getting paid accurately

A properly collected sample that represents all the converters in your load then goes through two more advanced scientific processes called pyro- and hydrometallurgy, or fire assay with chemical dissolution and atomic absorption with an inductively coupled plasma mass spectrometry (ICP-MS). Now, your processor might have fire assay and an ICP lab in-house and pay you quickly based on the assay result they get; however, this is not the same as being paid on the assay result from the refiner or a third-party independent lab. Processing and refining take time. There are no shortcuts to getting paid accurately. 

Understanding the price

Finally, metal prices can be problematic when selling on assay. First, let me say this is a problem for all of us in the business of selling metal. It is an opaque market, which means it is hard to clearly see the price. Your metal does not come out of refining for about 100 days. This means to lock in a price for you, we must sell metal forward on a futures contract. Because you are recycling scrap catalytic converters, that means we are selling a product called sponge to coat new catalyst and make industrial products. We are not selling bars, ingot or bullion to the investment market. There is a discount on the metal price and a lease rate. Both come off the spot or physical price you see published online. Both can be calculated, but they are not readily disclosed to us. This can be confusing when you get a metal price that is different than the price you see online. This also can be an area of ambiguity. Can and will your processor explain the spread to you?

Selling converters on assay is the only way to ensure that you get paid the most from your converters with a process you can trust. However, it is still your responsibility to educate yourself and make sure the processor you choose is doing what it says it is doing and following the rules of assay. You buy the car. You own the converter. The lion’s share of its value is yours.

Becky Berube is the president of United Catalyst Corp., Greenville, South Carolina. She is a member of the Automotive Recycling Association’s Educational Programming Committee and president of the International Precious Metals Institute. She can be contacted at berube@unitedcatalystcorporation.com. To subscribe to United Catalyst Corp.’s daily e-newsletter or get PGM prices texted twice daily to your phone, text 60-Second Report or Daily Double to 864-834-2003 or email sales@unitedcatalystcorporation.com.