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The first full-scale commercial factory will be built in Uddevalla, Sweden, with an initial capacity of 34,500 tons of discarded tyres, which is equivalent to 40% of Sweden's yearly volume of end-of-life tyres.
Michelin is supporting a new joint venture between Enviro Systems and Antin Infrastructure Partners to establish a large-scale tyre recycling organization. Michelin intends to join the JV once the plants are completed in the future.
The volume of discarded used tyres has progressively increased to 3.5 million tons per year in Europe alone. While the growth of end-of-life tyres is expected to accelerate further in the coming decade due to consumer and regulatory trends, the recycling technology, infrastructure, and processes required to safely dispose of them at scale have yet to be efficiently implemented.
The joint venture founded by Enviro and Antin will develop end-of-life tyre recycling factories across Europe to produce sustainable raw materials such as recovered carbon black and oils to be re-used in the tyre and petrochemical industries.
The first full-scale commercial factory will be built in Uddevalla, Sweden, with an initial capacity of 34,500 tons of discarded tyres, which is equivalent to 40% of Sweden's yearly volume of end-of-life tyres.
Plant construction is set to begin in the first half of 2023, subject to the JV's final investment decision, with the plant likely to be fully operational by 2025.
The JV will concentrate on European plants that will significantly contribute to addressing waste management challenges posed by increasing volumes of end-of-life tyres, while also increasing Europe's strategic autonomy of valuable raw materials that are currently facing increasing supply constraints.
To enable the industrial development of this ground-breaking recycling technology, Enviro will combine its one-of-a-kind and patented technology for extracting carbon black and TPO from end-of-life tires with Antin's proficiency in creating and growing tomorrow's infrastructure platforms and Michelin's leadership position in sustainable tyres.
Enviro's patented technology will be licensed exclusively to the JV as part of the JV throughout Europe. It will also be in charge of R&D as well as acting as the sales agent in the market and providing technical services and support to the JV and its group entities. Enviro will be paid service fees as well as an asset fee, the latter of which will be computed based on the profitability of each facility. Enviro will also have the ability to create long-term value through its shareholding in the JV.
Antin's NextGen platform, which will own the bulk of the JV, will fund the initial investment. Enviro's stake in the joint venture will eventually amount to around 30%.
Michelin intends to become a participant in the JV as the subsequent factories are developed. The JV has also negotiated a multi-year supply arrangement with Michelin for the initial units. The contract with Michelin calls for the delivery of recovered carbon black and tire pyrolysis oil (TPO).
Enviro's Board of Directors intends to assess the company's long-term capital requirements and capital structure in order to fund Enviro's ownership of the JV as soon as realistically possible during the next 24 months. Enviro will be represented on the JV's Board of Directors from the start.
At this early point, the Company is unable to make more specific projections concerning the potential impact on Enviro's earnings and financial situation.
Site selection in other European nations has begun to guarantee a speedy roll-out, with the goal of building recycling capacity for up to one million tons of end-of-life tires by 2030, which corresponds to one-third of all tires disposed of in Europe each year. Every plant establishment is subject to numerous regulatory permissions.
The parties formed the JV to meet the growing need for more sustainable solutions for end-of-life tires, in response to the industry's ambitious ambitions for circular and more sustainable tire production, with industry leaders committed to utilising 100% sustainable materials by 2050.
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