Scandinavian Enviro Systems and Antin Infrastructure Partners, through its NextGen platform, announced the formation of a joint venture to create a large-scale tire recycling group. Supported by Michelin, the JV group will establish end-of-life tire recycling plants across Europe to produce sustainable raw materials, including recovered carbon black and oils to be re-used in the tire and petrochemical industries, Michelin said. The venture will focus on European plants that will significantly contribute to solving waste handling challenges from growing volumes of end-of-life tires, while at the same time increasing Europe’s strategic autonomy of valuable raw materials that currently are facing growing supply constraints.
Michelin said it plans to join the JV as a partner, as it signed off on a multi-year supply agreement to deliver recovered carbon black and tire pyrolysis oil (TPO). Enviro’s ownership in the JV will ultimately correspond to approximately 30 percent, while the initial investments will be financed by Antin. The board of Enviro intends to review Enviro’s long-term capital needs and capital structure to fund Enviro’s ownership of the JV as soon as practically possible over the coming 24 months.
As part of the JV, Enviro’s patented technology will be licensed exclusively throughout Europe. The company will also be responsible for R&D and act as the market-facing agent for sales. In addition, Enviro will provide certain technical services and support to the JV and its group companies. As remuneration, Enviro will receive service fees from the JV as well as an asset fee, the latter of which will be calculated based on the profitability of each plant, Michelin said.
The first full-scale commercial plant will be built in Uddevalla, Sweden, with an initial capacity to recycle 34,500 tons of disposed tires, equal to 40% of the annual volume of end-of-life tires in Sweden. Plant construction is scheduled to start in the first half of 2023, subject to a final investment decision by the JV, Michelin said. The plant is expected to be fully operational by 2025. Following the successful commissioning of the Uddevalla plant, acceleration of the European roll-out will commence, according to the company.
Michelin said site selection in other European countries has been initiated to ensure a rapid roll-out, with an aim to build recycling capacity for up to approximately one million tons of end-of-life tires by 2030, corresponding to a third of all tires being disposed of in Europe each year. The establishment of individual plants is subject to various regulatory approvals, those in the JV said.
Through the creation of the JV, the parties are responding to the increasing demand for more sustainable solutions for end-of-life tires following the industry’s ambitious targets for circular and more sustainable tire production, with industry leaders committing to using 100% sustainable materials by 2050.
By replacing virgin carbon black with Enviro’s recycled carbon black, carbon emissions can be reduced by over 90%, according to Michelin. Based on the targeted volume of 1 million tons of end-of-life tires, carbon dioxide emissions would be reduced by 670,000 tons, the JV estimates. Further, the pyrolysis oil extracted would have an energy content of 6 TWh, which can be used to replace fossil fuels, or as a substitution for fossil oils for multiple purposes in non-fuel sectors.
The volume of disposed end-of-life tires has been steadily growing to reach 3.5 million tons per year in Europe alone, Michelin said. While growth in end-of-life tires is forecasted to further accelerate in the next decade due to consumer and regulatory trends, the recycling technology, infrastructure and processes necessary to properly dispose of them at scale have not yet been effectively implemented. Michelin said this JV serves as a response to establishing a sustainable solution to recycle end-of-life tires on an industrial scale.
