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Originally published Saturday, May 14, 2005 at 12:00 AM

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Thieves feed China's need for scrap metal

At Belgium's biggest railway station, 770 of 800 steel luggage carts have vanished. In Pittsburgh, 400 parking meters were plucked from...

Bloomberg News

At Belgium's biggest railway station, 770 of 800 steel luggage carts have vanished. In Pittsburgh, 400 parking meters were plucked from roadsides, and in Shanghai, China, manhole covers are disappearing from the streets.

From London to Calcutta, India, scavengers are plundering anything that contains iron, steel or copper, costing local governments and companies millions of dollars. Prices in the $85 billion global scrap market have tripled since 2003 as China has sucked in recycled metal from around the world.

"There is an almost insatiable global demand for scrap, mainly to feed China's steel mills and its booming economy," says Rick Wilcox, director general of the British Metals Recycling Association in Brampton, England.

China's gross domestic product grew 9.5 percent in 2004, the fastest among the world's biggest economies, increasing demand for metal to build office towers, cars and appliances. China this year will buy almost a third of the world's steel and account for 80 percent of the growth in demand, according to the International Iron & Steel Institute, a trade group for steelmakers.

Rising demand for scrap is boosting profits for legitimate recyclers such as Sydney-based Sims Group, the world's biggest recycler of scrap metal. Net income in the nine months ended March 31 almost doubled to $115.8 million, the Australian company said in April.

"I'm bullish on Chinese demand in the medium and longer term, though it will not be a straight line," says Jeremy Sutcliffe, chief executive officer of Sims Group.

Schnitzer Steel Industries, a Portland-based scrap steel recycler, in April said net income in the quarter ended Feb. 28 rose 94 percent to $36 million. The company's shares surged more than sixfold from the end of 2002 through February. Scrap shipments will continue to increase as an estimated 300 million Chinese move from the countryside to the cities by 2020, swelling demand for steel, says Schnitzer CEO Robert Philip, citing government forecasts.

"Prices are headed way up," Philip says.

Stolen metal finds its way to the legitimate businesses when thieves sell scrap to small junkyards that don't check the origin of the material before they sell it to wholesalers, says Francis Veys, director of the Brussels-based Bureau of International Recycling. The bureau represents companies in 55 countries.

"It's falling through the chain," Veys says.

In 1994, Bruxelles-Midi, the Brussels terminal for high-speed trains to London, Paris and Amsterdam, bought 800 luggage carts for about $644 each. Now there are only 30 left, says Anne Woygnet, a spokeswoman for the Belgian state railways.

In the east London borough of Newham, 260 drainage grates and 42 manhole covers have been stolen since October.

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"This certainly put us on the map, but not in the way we would want," says John Page, head of the Newham borough council's crime and antisocial-behavior team.

Steel production in China almost tripled in the past five years as consumers bought more cars and refrigerators and the country built stadiums, subways and roads to prepare for the 2008 Olympics in Beijing. China surpassed Japan to become the world's biggest iron-ore buyer in 2003.

Shanghai, home to Baoshan Iron & Steel Co., which supplies half the steel used by China's carmakers, already loses so many manhole covers that the local water bureau publishes a daily tally on its Web site. More than 4,740 have been purloined since the beginning of last year. At least eight people have died after falling into uncovered sewers, according to the government-owned Xinhua News Agency.

Subrata Mukherjee, the mayor of Calcutta, says drug addicts in India's second-largest city steal about 1,000 manhole covers a year.

As a deterrent, the city started using concrete covers, which cost $18 each. Thieves now crack open the concrete to steal the iron reinforcing rods, Mukherjee says.

Pressure on copper prices is being felt 31 miles south of Brussels, where police helicopters patrol a stretch of railway along which thieves have stolen thousands of meters of copper cable from the signaling system.

In October and November, there were 20 heists a month, each involving about 100 yards of cable. Every time the cables are cut, trains to Brussels from Charleroi, an airport used by Dublin-based Ryanair Holdings, are delayed.

Pittsburgh police in December arrested a man on suspicion of stealing as many as 400 parking meters, extracting the coins and then selling the 50-pound poles to a junkyard, says police spokeswoman Tammy Ewin.

Large scrap buyers such as Sims and Schnitzer record the name of everyone who sells them metal to ensure they don't accept stolen material and to discourage illegal scavenging, says Veys, the recycling-association head.

"None of our members are involved in this," he says.

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