Catalytic converter theft and illegal trading are causing all sorts of problems for not only recyclers but the wider economy as well.
Since last year, the COVID-19 pandemic has seen many different trends play out in the automotive industry. On the recycling front, one of the most significant has been around catalytic converters, including theft and illegitimate business resulting from it.
Although the price of scrap metal overall has declined in recent years, the price of precious metals, such as palladium, platinum and Rhodium (which are used for catalytic converters), has been increasing. A conversation I had back in October with one of our association members, revealed just how much the demand and prices for converters have gone up.
A side-effect of that has been several businesses popping up to capitalize on the demand for converters because the pricing on them has become so robust.
A downside to this has been a corresponding increase in converter theft across North America. Essentially, what’s happening is thieves are targeting vehicles, usually larger pickups or SUVs, crawling underneath them and using a Sawzall to remove the catalytic converters.
Dealers have become especially prime targets due to having large numbers of these vehicles on their lots that are readily accessible from the street. Additionally, those businesses that have fleets of trucks and utilities, including charities are also being targeted. The thieves can literally crawl under the vehicle and saw off the converter in a matter of minutes, making it very difficult to combat the problem.
To give you an idea of how big an issue this is, one of our members in PEI provided information on a converter theft ring that was broken up by police and some $100,000 worth of cats recovered.
For our members who deal in end-of-life vehicles not only is the theft aspect an issue but so is the perception of our industry in the face of media coverage on the converter problem due to an underground, cash-based economy that is being fueled by converter prices and theft.
To help take a pro-active approach to the problem, ARC, in conjunction with ARA in the U.S. and the Institute for Scrap Recycling Industries (ISRI) and the International Precious Metals Institute (IPMI) have joined together to share information and see what is being done to help combat this problem including actions from law enforcement and the insurance industry.
A global level
During a recent conference call among these different groups, it was very interesting to hear about what is happening at the global level and is being pushed down to national and even local jurisdictions.
In Ontario for example, the City of London has proposed a bylaw to register catalytic converters to ensure where they have been sourced from and where they are being sent to. The trouble is, this currently applies only to the City of London, so somebody, in theory, could remove a cat off a vehicle in that area and drive to a recycler in a neighbouring county or municipality.
To make such a program work, it would need to be elevated to a provincial and ultimately a national level. To do so, however, requires involvement from many different areas of government because you’re dealing with precious metals and any transactions over $10,000 need to be reported, otherwise, it can trigger a red flag for money laundering activities. A key part of all this is finding a connection between local thefts of converters and those individuals or businesses that are actually purchasing them.
There’s no question that this is an automotive industry-wide and international problem, and the way I see it, our role is to educate our members about what’s happening out there and work together at a regional, national and even international level to not only help curtail the actual thefts themselves but also clamp down on those businesses that are posing as ‘auto recyclers’ simply to get their hands on catalytic converters.
It is illicit business operations like these that destroy the ability of legitimate recyclers to operate, which in turn impacts the larger circular economy.
Steve Fletcher is the Managing Director of the Automotive Recyclers of Canada and the Executive Director of the Ontario Automotive Recyclers Association. You can reach him at [email protected].