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Telstra still deciding fate of copper post NBN rollout

Date

David Braue

Valuable metal could add dollars to bottom line, create jobs.

Insulated copper electrical wiring. The global economic recovery will boost consumption of the metal used in cars, homes and appliances while mining companies struggle to increase production.

Insulated copper electrical wiring. The global economic recovery will boost consumption of the metal used in cars, homes and appliances while mining companies struggle to increase production. Photo: Daniel Acker/Bloomberg

Telstra is sitting on copper wiring scrap potentially worth more than half a billion dollars - and it is undecided what to do with it when the national broadband network is rolled out.

Thieves routinely steal the metal - which can fetch up to $6.50 a kilogram - in the form of pipes and wiring from churches and schools, but the telco says it could be uneconomic to recover all the copper wire that connects 8.2 million premises through 140,000 kilometres of ducts.

NBN Co's $11 billion contract with Telstra gives it the right to lay fibre-optic cables through those underground ducts.

Under the agreement's terms, Telstra will disconnect copper services 18 months after newly-laid fibre is ready for service in each area.

But what happens to the copper remains unclear. Discussions have been going on for years about whether Telstra would extract it and sell it for scrap but no decision has been made. Enquiries by IT Pro confirmed the company has still not decided what to do with the valuable metal.

Recovery would involve great expense in labour and processing. Telstra might also be waiting to see whether a possible change of government in 2013 changes the NBN rollout. The Coalition's alternative fibre-to-the-node (FttN) plan would rely on gaining access to and building on the existing copper network, a policy that CEO David Thodey recently indicated could be beneficial for Telstra.

The copper "is definitely worth something as scrap, although I don't think the company is going to get rich on it," said a Telstra source who asked not to be identified. "Some of it will be left there because it will be more costly to pull it out, but there are definite plans to recycle whatever can be recycled. However, it's still too early to talk details."

Rough calculations suggest both the potential value of the copper assets and the massive logistical effort that would be required to process it to be sizeable. Estimates suggest Telstra currently has up to 154 million kilometres of copper in the ground. While copper wiring comes in many thicknesses, typically used 26 AWG (26 gauge) cable measures 0.405mm in diameter and weighs approximately 1.152 grams per metre of cable. The entire network would therefore comprise at least 177,408 tonnes of raw copper.

Current prices for recycled copper range from approximately $2.30 per kg for thin copper like that used to connect houses, up to $6.50 per kg for higher-grade, thick bundles of copper like that used within much of Telstra's copper network. T1 cables, for example, bundle 25 pairs of 22-gauge copper wires, each strand of which is thicker than 26-gauge – so each metre of T1 would have significantly more copper in it than in the premises access lines.

"From both a financial and pragmatic perspective, it would make sense for Telstra to recycle the copper in its network," says Shara Evans, CEO of telecommunications research firm Market Clarity.

"The NBN implementation study estimated that 50 to 80 per cent of conduits have enough room to also deploy fibre – so, depending on the size of the existing copper conduit, it may be necessary to remove the copper in order for NBN Co to use the conduit for fibre deployment."

Copper isn't always being removed to make way for fibre, however: in South Brisbane, Queensland, Telstra recently rolled out fibre to the premises and has not yet removed the old copper, according to a Telstra spokesperson.

"The copper remains in the ground," he said, "but this is not to be seen as a precedent for the NBN more widely."

That suggests recovery could indeed be a part of Telstra's strategy going forward – and Telstra may need to act sooner than later to deter thieves that have shown remarkable tenacity in pinching old copper cable for resale.

In January, thieves stole copper piping from a former police station in Melbourne.

In March, the ACT Master Builders Association called for copper to be declared a precious metal to ensure sales be regulated, meaning that sellers must declare the origin of any stock. The ABC reported more than $300,000 worth of wiring, pipes and scrap had been stolen from construction sites in the ACT in 120 incidents in the previous 12 months.

Four years ago, Victorian police found 8.3 tonnes of stolen copper wiring ready for export as part of a copper-theft ring they said had netted over $1 million. In 2010, thieves in New Zealand staged a bold but risky attack on an electrical switch yard in which they drained coolant oil from 220,000-volt transformers and dug up lengths of copper cables,as reported by The New Zealand Herald.

Whether targeted by opportunistic thieves or methodically recycled by Telstra, the volume of copper in Telstra's network would likely make it a valuable target.

At the low-end price, and assuming the entire network were built from 26-gauge wire and completely recycled, Telstra's copper network would be worth over $408 million; if the entire network were built using the thick cable – which it is not – it would be worth $1.153 billion, notwithstanding the price effect of dumping such a massive quantity of copper into the open market.

Paul Ryan, secretary of the Australian Metal Recycling Industry Association, believed the market could absorb the extra quantity, particularly in China – but noted that the extensive process involved in stripping and cleaning Telstra's copper would not be insignificant.

High local labour costs mean much of the wiring might have to be shipped overseas for labour-intensive processing, he said.

"It's difficult and expensive to get the PVC or other wrapping off the copper material. That sort of work goes to places where the pay rates are significantly lower and they can afford to have lots of people removing the bits."

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25 comments

  • Recovery of this copper will be a significant issue. Sure some areas copper could be recovered but any Telstra cable over 400 pairs will be very difficult to be recovered especially if these cables have been in duct more than a couple of years. My guess is that Telstra will spend more money in recovery than they will get selling the stuff. But accountants are statistians so they will go for it.

    Commenter
    John
    Location
    Sydney
    Date and time
    May 08, 2012, 1:49PM
    • "It's difficult and expensive to get the PVC or other wrapping off the copper material. That sort of work goes to places where the pay rates are significantly lower and they can afford to have lots of people removing the bits,"

      AS most of this copper is underground, it is most likely AS/ACIF S008:2001 compliant. That is it has a water blocking jelly compound within the shielding. Lots of people with very sticky fingers !!!

      Commenter
      Sticky Fingers
      Date and time
      May 08, 2012, 2:49PM
      • It's a no brainer. Leave it there for those who don't want to connect to the Not Bloody Needed network

        Commenter
        Hankers
        Location
        Tuggerah
        Date and time
        May 08, 2012, 3:38PM
        • That will go well with the candles for those who did not want electricity

          Commenter
          observer
          Date and time
          May 08, 2012, 4:29PM
      • I used to work for a contractor doing "recovery". Its often not viable especially when you pull one small cable out and another fails. But the old and large mains cables are a whole different issue. These usually run between exchanges etc. And between big cities like Sydney - Central Coast etc Often along main roads so access is a breeze. They have their own ":duct" and dont generally affect other cable.

        They are approx 100mm round and weigh around 26kg a metre. Has to be cut with a petrol saw into pieces and winched out (commercial tow trucks are ideal) Worth a fortune and the copper is a different grade (PURE) and often paper wrapped so no insulation affects price. Gets the best price and as its not new cable the recyclers dont worry about the theft reporting issue to Telstra. One job we recovered 14,000 metres

        Here is the caper - The recycler pays $10kg for pure bulk copper. But telstra expect to receive mixed (insulation) rate which is like $2 a kilo. We collect $3million. The good recyclers melt it asap so all evidence is gone. We give Telstra $73K. And they pay us to rip it up !!

        A contractor can make a profit of millions doing a job like this - Better than gold mining. AND get paid to do it.

        Commenter
        Me
        Location
        Sydney
        Date and time
        May 08, 2012, 3:38PM
        • There will be massive junction cables between the exchanges as well as big distribution cables from the exchanges to pillars etc. that contain hundreds of tonnes of copper.

          Most of this stuff has been in for many decades as newer technology in the 1970/80's allowed more services to run on the old junction cables, and Telstra cut back on any replacements and upgrades of local external plant once they were privatised.

          Telstra are sitting on a proverbial "Gold mine" with this stuff all over the country and as soon as fibre replaces a service this should be recovered for financial reasons as well as make room in the ducts.

          Only total fools would want to keep using the crappy metal tail cables when there is a fibre alternative - their ongoing maintenance costs will eventually dwarf in comparison with the NBN.

          Commenter
          DC
          Location
          Melbourne
          Date and time
          May 08, 2012, 5:05PM
      • Use the same rules used for opal mining in Coober Pedy.

        Allocate a claim to individuals. Any wiring they dig up and strip within their claim area, they can sell for scrap.

        Costs Telstra nothing, and people are likely to make more than the $11 an hour they could make as a taxi driver.

        Commenter
        Matt
        Location
        Sheumack
        Date and time
        May 08, 2012, 3:43PM
        • keep the copper. one good backup in case of civil or other emergencies. if the fibre goes down , hardwired , analog telecommunications may be a lifeline..

          Commenter
          pete
          Location
          melbourne
          Date and time
          May 08, 2012, 3:51PM
          • "Keeping the copper" is not a cost-free option. The copper network currently costs $1 billion per year to maintain. One of the primary attractions for Telstra in accepting the NBN deal to shut down the copper network is that they won't have to keep paying a billion dollars in upkeep each year (probably rising as the network ages and more faults occur).

            If you simply left the copper in the ground, unguarded and unloved, it would not be reliable enough to turn to in times of crisis, as you suggest.

            Commenter
            Gwyntaglaw
            Date and time
            May 08, 2012, 6:07PM
          • Dream on, even the copper has been digital for ooh, what a decade or more? There aren't any analog exchanges left!

            So we might as well use the new fibre, eh? Or does it make a noise that turns all dogs into killer zombie cujos? Any excuse to bag the NBN, any excuse to avoid the future.

            Australia - struggling into the 21st century, kicking and screaming all the way!

            Commenter
            architect_of_Reality
            Date and time
            May 08, 2012, 11:49PM

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