SA’s copper theft is out of control

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 he 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.

It was clear, said the judge, that Matsetela was the one in control of the copper theft syndicate. 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.

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[1] 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.

"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 busted 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. 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." 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.

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.

For more on this story[2] visit www.moneyweb.co.za[3]

References

1. ^ report (globalinitiative.net)
2. ^ this story (www.moneyweb.co.za)
3. ^ www.moneyweb.co.za (www.moneyweb.co.za)