London (Platts)--4Dec2012/926 am EST/1426 GMT

A change in UK law to eliminate cash payments for scrap metal, which took effect Monday, has met with a mixed response.

"Banning cash alone will have a devastating effect on legitimate small traders whilst having little effect on the rate of metal theft, unless there is a robust regulatory framework to back it up," said Ian Hetherington, director general of the British Metals Recycling Association, in a statement.

The new measures, aimed at stamping out the illegal metal industry, which according to government estimates costs the UK at least GBP220 million ($354 million) a year, remove "no questions asked" cash payments for scrap metal, raise financial penalties for illegal traders to fines of up to GBP5,000 and give police new powers of entry to tackle illegal trading in metal yards.

"These measures are designed to reform the industry to support legitimate dealers and tighten the net around those who flout the rules," said Crime Prevention Minister Jeremy Browne in a statement.

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The new law on cash payments applies to traditional scrap yards as well as mobile collectors, known as "itinerant collectors," who go from house to house collecting waste materials including scrap metal, the BMRA's Hetherington said.

"We are confident that 99% of itinerant collectors are now covered by the cash ban," he said. "However, as legislation currently stands, some metal traders -- such as motor vehicle salvage operators -- are exempt, which leaves an unfair playing field."

The UK's Association of Chief Police Officers welcomed the new measures as an important first step.

"These measures will seriously curtail the market for stolen metal as there will now be a clear audit trail back to those bringing commodities into recycling yards and severe sanctions for those who step out of line," said the ACPO's lead on metal theft, Deputy Chief Constable Paul Crowther, in a statement.

"The step forward in legislation is welcome and significant, but will not work in isolation," Crowther said. "Industry, police and other agencies must continue to work together to enforce the new legislation, support further modernisation of the law and take action against those criminals who continue to target the very infrastructure we have all come to rely upon."

The BMRA stressed the need for further legislation, in the form of the Scrap Metal Dealers Bill, currently making its way through Parliament. If made law, the bill would require anyone selling scrap metal to dealers to provide photographic proof of identity and would also stipulate that no one may carry on a business as a scrap metal dealer unless they have a license from their local authority.

The bill "aims to improve regulation and enforcement to rid the industry of illegal and unscrupulous dealers," Hetherington said.

If illegal sites are allowed to continue to trade, "they will no doubt offer householders and businesses payment in cash too, therefore negating the purpose of the cash ban -- to remove the rewards that make metal theft so enticing," he said. "It is now more important than ever that it makes it into law and is implemented as quickly as possible."

The bill is expected to receive parliamentary approval in the New Year.
--Andy Blamey, andy_blamey@platts.com
--Edited by James Leech, james_leech@platts.com

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