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A loud bang was heard in the Stillwater Mining plant, north of Yellowstone National Park. The noise came from a truck dumping pulverized rocks.
The mined minerals contain platinum, palladium, and rhodium. These are three of the most rare and expensive metals in the world. They also form the basis of millions of catalytic convertors, which reduce the pollution from gasoline powered vehicles.
The other end of this plant had another batch of recycled metal. This one was not mined but instead, it had come from catalytic convertors which had been crushed into powder. Other steps in the process involve mixing new metal with old under high heat and sending it to a refinery.
It is cheaper to recycle catalytic convertors than it is to extract the minerals. It is risky, however, as Stillwater found out after spending more than $170,000,000 on used catalytic converters. Many of these were stolen. According to an indictment that was filed in Long Island in New York this spring, Stillwater wasn’t charged with any crimes and denies knowing the converters had been stolen.
The indictment is based on a catalytic convert theft epidemic that costs billions of dollars and has led not only to vehicles being rendered unusable, but also to shootings, hijackings of trucks, and other violent acts. The replacement devices can be difficult to find and cost up to $1,000.
The thefts are generating a lot of attention, but there’s not a whole lot we know about where the metal is, who benefited from it, and why they were so hard to stop.
An analysis of social media and company records, along with interviews of more than 80 industry officials on three continents, revealed that stolen items are passed through middlemen and smelters in the United States as well as abroad. The thefts are made to look like they came from somewhere else, and the thieves may not even know it.
The New York Times reported that the metal was mixed in with legal supplies sourced from scrap yards and mines during processing. It is then sold to pharmaceutical and automotive companies, but also companies who make catalytic convertors. The New York Times discovered that the metal is mixed with legitimate supplies from mines and scrapyards during processing. It’s then sold primarily to companies who make catalytic converters for automotive industry, as well as pharmaceutical companies.
It is difficult to tell what is illegal and what isn’t.
There are banks that provide short-term funding for metal processing, as well as other lending institutions with a light regulatory framework, also known by the term “shadow banking,” which offer their services in cases where big banks do not. Mark Williams, former Federal Reserve Bank research, stated in an interview.
Estimates of theft are difficult to quantify, and so they vary greatly. Howard Nusbaum is the administrator of National Salvage Vehicle Reporting, a nonprofit organization. He says that only six percent (12 million) of catalytic convertors are recycled every year. The rest comes from junkyards or other legal sources. The program works closely with police.
The fact that the number is small is of little comfort to owners of the 600,000 vehicles whose “autocats”, or cat devices as they are sometimes known, were stolen in the past year. Commercial appetites for these three metals – designated Platinum Group Metals (PGMs) – have been unquenchable.
Indictment of a New Jersey car shop last year claimed that it sold stolen converters, unidentified and without charge, to a co-conspirator. People briefed about the indictment identified the defendant as Dowa Metals and Mining America. It is a Japanese owned smelter which describes itself as “the gateway to MGP recycling in North and South America.”
In a press release, a Dowa spokesperson stated that “the company has not engaged in inappropriate conduct” and all allegations of the contrary were false.
This market has created a cottage industry. The New Jersey store sold thieves access to applications that provided up-to date metal prices and estimated values of various vehicles’ catalytic convertors.
They have targeted a wide range of areas. A Bimbo bakery delivery truck, a Mr. Ding A-Ling truck, and 36 buses were targeted over a weekend by a Connecticut town. Amy Foote is an opera singer from the San Francisco Bay Area. She said that 11 devices had been stolen. The car was referred to as “catalytic convert vending machines” by the man.
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