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Converter Recycling: Cat Burglary and Other Forms of Theft

Becky Berube, United Catalyst Corporation President, based in the US, looks at what vehicle recyclers can do to avoid getting stung by those pesky CAT burglars!

 

Converter Recycling: Cat Burglary and Other Forms of Theft feat four
Becky Berube

The precious metals markets are up, and so are the incidences of stolen 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 Corporation, we are seeing recyclers sending smaller lots more frequently to reduce the risk of theft and move the converters quickly.

What can be done to stop stolen converter laundering?

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

Recyclers, do your job.

Being from Massachusetts it easy to quote Bill Belichick, “Do your job,” but since so many of you are not fans, let me throw a few other quotes at you. Ben Franklin said: “An ounce of prevention is worth a pound of cure,” with regards to fire safety. In Full Metal Jacket, Gunnery Sergeant Hartman says in the security scene 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.” To be honest, you must hate the idea of people stealing from you and do everything in your power to stop it. In short, you need to think like a thief.

Over the past thirty years, we have seen some creative converter storage solutions in yards. The most original may 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. One recycler we recall had an alarm and video surveillance on it. One weekend he broke into it himself, like the show Prison Break, to see how long it would take the police to get there. If it had been a real robbery, the converters would have likely been gone. If the police do not care if a car is stolen, do you think they will care if a catalytic converter gets stolen? At least you would have the video. A deer cam does not cut it either. That will snap a pic 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 oddities like tall grass in a section or a hole in the fence.

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 unknown. Pick a colour 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 3/4 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 towards the end of the sale. Stay until the transaction is complete and the payment is made to you to avoid a kickback to your employee. If you introduce a new converter company to your yard and your employee objects or is hostile towards them, it is possible he or she is getting paid. As William Shakespeare writes in Hamlet, “The lady doth protest too much, methinks.” Many people who work for you do not consider this stealing, but rather getting their piece of the pie.

Bottom line. Be meticulous about safeguarding your valuables: locks, video, counts, personnel. Time and money – whatever it takes. The primary responsibility lies with you.

Collectors and Processors need to be held accountable.

Unfortunately, physical theft is not the only form of theft when it comes to scrap catalytic converters. Whether you sell by the piece or on assay, you could be being robbed. We have mentioned a few ways to avoid thievery when selling by the piece above. When it comes to buying stolen converters, collectors and processors need to do their part to research and know their customers. Bad actors must be eliminated from this industry. Companies and associations must refuse to do business with criminals. Like President Truman, we all need signs on our desks that says, “The Buck Stops Here.” If the good players in the supply chain would scrutinise the suppliers and refuse to purchase conflict material, we could stop the underground movement of stolen material into refining.

How to stop losses with assay-based selling.

If you finally made the switch from selling your converters by the piece to selling them on assay, and you have found, like most of us have, that it is totally worth it, your average cat sale is up 5-45% 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 contained inside your converters. It is exciting. You are hedging and selling metal into the market. Sure, you may have to wait a little longer for your money, but with an early payment and the balance in 30 – 45 days, you are ahead of the game. And with more money in your bottom line.

So, with assay, what could possibly 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 Corporation, let me explain what can and does go wrong. And, more importantly, how you can fix it.

Count and Weights: How many units or pounds lost is acceptable?

In converter processing, everything begins and ends with weights and counts. The weight of your entire lot, converters, pallets, shrink wrap, and all. We begin with the end in mind. BOL 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.

Dust: If you are missing weight, your missing money.

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 may be 1-3% of the weight of the load while being 10-20% of the value. Therefore, we suggest letting those with expert systems de-can for you. After the count is right, the de-canning system is paramount to getting paid the correct amount.

Sampling: In-house XRF, a guide, not a basis for final payment.

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? It is true. After de-canning the converters, the catalyst must be milled into a powder, and a representative sample must be taken to be tested. That sample is only 5-10% of your material, so it had better represent all your converters. Sampling is science in and of itself. The first analysis or XRF and it is only plus or minus 10% accurate. That could be a 20% 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?

Assaying: There is no shortcut to getting paid accurately.

A properly collected sample that is representative of all your converters in your load then goes through two more advanced scientific processes called pyro- and hydro-metallurgy or fire assay with chemical dissolution and atomic absorption (AA) with an Inductively coupled plasma mass spectrometry (ICP-MS). Now your processor may 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. Are you getting paid on assay very quickly from your processor’s in-house lab?

Metal Prices: How to understand the price you get.

Finally, another area that can be a problem with selling on assay is metal prices. First, let me say that 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 see the price clearly. 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. Since 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. So, there is a discount on the metal price. There is a discount 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 from the price you see online. This can also be an area of ambiguity. The question is, can and will your processor explain the spread to you?

Selling converters on assay is the way to go. It 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 they say they are doing and following the rules of assay. This is why we write these articles. We want you to sell on assay. We want you to work with United Catalyst. But more than anything, we want you to get the most and avoid being cheated. You buy the car. You own the converter. The lion’s share of its value is yours.

If you have questions about this article or any issue pertaining to catalytic converter recycling, our team is here to assist you. Recycling converters on assay is a journey. We hope you will rely on us at United Catalyst as your guide.

To subscribe to our daily e-newsletter or get Platinum Group Metal prices texted twice daily to your phone, TEXT 60-Second Report or Daily Double to 864-834-2003. You can also call us or email us at sales@unitedcatalystcorporation.com

Visit www.unitedcatalystcorporation.com

Becky Berube serves the recycling community as President of United Catalyst Corporation, Member of the Automotive Recycling Association’s Educational Programming Committee, and is President of the International Precious Metals Institute.

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