Two Brokers Not Insured Against Nickel, Copper Theft -Sources

14th Jul 2010 12:00

By Andrea Hotter Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The theft of several hundred metric tons of nickel and copper from a warehouse in the U.K.'s north west will end up being an expensive crime for a couple of metals brokers, because they weren't insured against the burglary, persons familiar with the matter told Dow Jones Newswires. Two of the six brokers that had metal stolen could now be facing a huge bill to replace it because liability for insurance lies with the owner of the warrant--a document of possession--for the material. The burglary, which took place May 31, was from a shed in Liverpool's Huskisson Dock owned by warehousing company Henry Bath & Son. Each ton of nickel--used to make steel and worth around $21,000/ton when it was stolen--would have cost just $14-$16 a year to insure. Similarly, insurance for each ton of copper--used in housing and construction and worth around $7,000/ton when it was stolen--would have cost only $5 a year. According to the Merseyside police, the metal was in sheets form and is worth "several million pounds." It's not clear whether two of the brokers decided against insurance because they were confident that the risk of metal theft was low, or because their insurance policies had unknowingly expired. Either way, the oversight means the brokers must now either pay up to their client or replace the metal at their own cost. A warehousing company can only be liable for a theft if it is found to be guilty of negligence or fraud. Henry Bath declined to comment, but the Merseyside police said the owner of the warehouse was offering a "substantial" reward for information leading to the arrest and subsequent prosecution of anyone involved in the burglary or the recovery of a significant amount of the metal. "Detectives believe that such a large quantity may have been divided into separate loads following the burglary and transported to other parts of the U.K.," the Merseyside police said. High-grade copper and nickel is often imported and bought by industrial users such as smelters and also by large trading companies. Detectives said the metal might be being stored elsewhere in the U.K. until it can be sold on, possibly in Teesside, Humberside or Yorkshire, where there is still heavy industry and smelting facilities to reduce it in size further or change its appearance. Paul Crowther, Deputy Chief Constable of British Transport Police and national lead on metal theft for the Association of Chief Police Officers, said scrap yards are the method of choice for criminals to sell on their stolen metal. Henry Bath has four warehouses approved to take London Metal Exchange base metals in Liverpool, an area of the north west where the latest Office for National Statistics data shows unemployment is 11.5% against a national average of 7.3%. The theft serves as a stark reminder to those holding metal in warehouse not to overlook insurance and comes as police forces team up with industries to explore methods of tackling the increasing problem of metal theft at a time of high commodity prices. "The conservative estimate is that metal theft costs U.K. businesses around GBP770 million each year--although it is difficult to put a true cost on the impact this crime has," DCC Crowther said. "Often (scrap) dealers are unaware that the metal is stolen and can find themselves out of pocket when checks carried out by police result in the material being seized." The police said there's been a "marked rise" in metal theft in the last six months alone, with railways, utilities substations, businesses, houses and even road grids and manhole covers being targeted by criminals. Last September, 190 tons of aluminum ingots worth GBP360,000 was stolen from a Henry Bath facility in Liverpool. Police estimated that it would have taken up to eight heavy goods vehicles to remove that amount of aluminum, which was made by U.S. producer Alcoa Inc (AA) and Rio Tinto Alcan, a subsidiary of U.K.-listed Rio Tinto PLC (RTP). -By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; [email protected] (END) Dow Jones Newswires July 14, 2010 07:00 ET (11:00 GMT)