How will Cashless Scrap Metal Impact Recyclers?
After a number of the big recyclers recently pledging allegiance to cashle
ss payments at their metal recycling yards, we ask what would be the potential implications for smaller recyclers of changes to the existing legislation?
SITA recently became the latest large waste management company to make a commitment to “cashless payments” for metals at all of its yards. The company announced that it will launch a new electronic payment method at its metals recycling site in Hayes. The scheme, which is the first of its kind in the UK, will be rolled out across SITA UK’s 10 metals recycling sites.
It is estimated that metal theft costs the UK economy more than £1bn annually. Around 30% of the country’s £5B in scrap metal sales are currently cash transactions which makes it extremely difficult to track down metal thieves.
SITA’s Chief Executive, David Palmer-Jones and others have called for electronic payments to be mandatory to compliment the other proposed changes to the 1964 Scrap Metal Dealers Act. The proposed changes were introduced by Labour MP Graham Jones in his Scrap Metal Theft Bill in November of last year. As well as implementing cashless payments the bill would require sellers to produce a suitable photo ID for every transaction as well as giving police powers to search any scrap yard and close any yard where stolen material is found. It would also levy a dealers’ licence fee to fund regulation.
The Government has also recently announced that it will spend £5 million on a special task force to tackle the problem of metals theft.
So how will these proposed changes affect existing scrap yards and metals recyclers?
The US has been dealing with a huge metal theft issue for a number of years now and consequently most states have implemented some form of legislation to combat the problem. Measure include requirements for scrap metal dealers and recyclers to keep and report detailed records of transactions as well as cashless payment systems and in many cases a “tag-and-hold” policy that prohibit dealers from reselling metals within a certain time period (usually as instructed by police). Some states have also introduced criminal penalties for scrap dealers that are found to be knowingly reselling stolen scrap.
Around 45 states now have some form of legislation in place. For example, in Texas registered scrap dealers must report transactions to the Texas Department of Public Safety within 7 days of receipt. The report requirements include the date of the transaction, type of metal, metal form, weight, seller name, business name, business address, photo ID number, vehicle registration and vehicle make and model.
In Arizona the requirements are even more stringent. Scrap yards have to electronically report all non-account transactions within 24 hours to the Rocky Mountain Information Network. Details required include sellers name, address and personal details including sex, weight, height, hair colour, eye colour, race and DOB. The scrap yard also has to capture and submit a photocopy of the seller’s drivers licence or passport. They have to fingerprint and take a photograph of the seller. Finally, they are also required to include the details of the transaction including type of metal, form, weight, price and a photograph of the material!!!
California operates a cashless payment system (for all transactions over $20) and payment cannot be made until at least 3 days after receipt of material.
Many states including Louisiana, Michigan, New Mexico and Washington have “tag-and-hold” policies where material must be labelled and held for a specified number of days before it can be shipped or re-sold. Typically, this varies from two to seven days but in some states police can mandate that certain material is held for up to 90 days.
In addition to state legislation, at a federal level the U.S. Department of Justice, has enacted new reporting requirements for automobile recyclers, dismantlers and shredders in all 50 states requiring them to electronically report the intake and disposition of salvaged vehicles to the National Motor Vehicle Title Information System (NMVTIS) starting Jan. 1, 2010.
For more information on US scrap metals legislation refer to http://www.recyclingtoday.com/scrap_theft_legislation.aspx
If the current situation in the US is an indication of where metals recycling legislation is headed in the UK then I think it is fair to say that this could present significant challenges for the industry and in particular for small independent yards. The data capture requirements alone would represent a significant investment in technology not counting the ongoing administrative costs of compiling the reports. Is there a political will to implement these kind of measures in the current economic climate? I’m not sure. Recent news reports indicate that the bill is understood to be facing resistance from officials at the Department of Business as it runs contrary to the Government’s policy of reducing red tape. However, the problem of metal theft certainly is certainly not going to disappear and it is unlikely that the industry will be allowed to continue to self-regulate.
As always, I’d be interested to hear your views.