The Future of Tyre Recycling in Africa: Can businesses make profits out of it?
Over the past years, the tyre market in Africa has seen growth in demand and consumption, especially in the passenger car tyre segment. On its own, replacement tyres have been accounted for the majority share in Africa tyre market and this trend is anticipated to continue over the next couple of years; which leads to an overall projection of the Africa tyre market to surpass $8 billion by 2022.
Tyre manufacturing industry and its waste production in South Africa
While we were not able to get hold of the latest economic report of the African region, an article in 2014 reported that the local tyre manufacturers alone had helped contribute close to R20 billion to the South Africa economy annually. These businesses provide an estimate of 6,500 direct jobs for the locals and contribute to approximately 32,000 indirect jobs related to tyre production in agriculture, mining and other industries.
To meet the huge market demand for tyre in South Africa, the increase in supply through local tyre production and imports raises apprehensions about the various issues waste tyres create. According to World Bank, South Africa is the 15th largest waste generating country in the world. Where public health and environmental issues are notable concerns of policy makers and public, tyre manufacturers and importers faced challenges in managing their costs of disposing waste tyres and reducing incurrence of the environmental levy for importing and disposing tyres.
With the recent liquidation of Recycling and Economic Development in South Africa (REDISA), tyre recycling has become one of the hottest topics within the region and the tyre recycling industry at international level. It leads us to the larger question which many would have raised, “Is tyre recycling a viable business to explore? Can it be profitable?”
Is tyre recycling a viable and profitable business in South Africa?
REDISA was established to mitigate the detrimental impact of waste tyres on public health, environment, and economic development of lands, whilst involving local communities through job creation. It had set to achieve an ambitious goal of recycling 100% of the waste tyres (246,631 tons) produced in Africa in 2011, by the end of 2017. As of February 2016, it had helped the creation of 226 small businesses and 3112 jobs. 12,728 tons of waste tyres were processed according to the Department of Environmental Affairs. The results were remarkable, but far from achieving the nation’s objective of recycling 100% of its 38 waste streams by 2022. The blueprint which REDISA was built on is no longer valid, with businesses opposing the move in view of cost factor and in turn, leading to jobs cut.
While there are apprehensions about the impact REDISA’s liquidation has on the tyre industry, others are actively exploring various opportunities to recycle waste tyres for profits. Here are some examples of South African businesses which had successfully turn waste into worth over a span of few years.
Tyre recycling and repurposing for entrepreneurs and small business owners
Entrepreneurs and small business owners could potentially model after SoleRebel’s success in creating a home-grown footwear label. SoleRebel’s business model not only gives locally-sourced and recycled tyre materials a new lease of life, it also creates jobs and skills-upgrading opportunities for the local communities with little reliant on advanced technology and huge capital. Aside from footwear, businesses can look into the following applications focusing on consumers:
- Fashion accessories
- Rugs and mats
- Garage gym equipment
Tyre recycling and repurposing for larger enterprises
For larger enterprises that are able to leverage on economy of scale, they could exploit the use of advanced technology along with strategic partnerships with international players. Mathe Group is a leading example which projected its Return-on-Investment within 2 years of operation. Larger enterprises can explore options of providing recycled materials for both consumer and commercial markets:
- Rubber crump for playground products, railway crossing panels
- Rubber powder for protective and architectural coatings applications
- Non-rubber material extraction such as steel
- Devulcanization and Pyrolysis for fuel gas, oils, solid residue (char), and low-grade carbon black
- Cement manufacturing
As South Africa continues to progress, its tyre recycling industry will increasingly play an important role in boosting her economic potential. Tyre recycling businesses need to actively engage with the policy makers and local communities to ensure their own survival and growth in the ever-changing competitive landscape.
What to look out for?
The upcoming Tyrexpo Africa show in April will play host to over 3,000 stakeholders within the tyre ecosystem in Africa and the surrounding regions. Policy makers, tyre manufacturers, OEMs, distributors, dealers and retailers can look forward to discuss opportunities, exchange knowledge, and discover new solutions on tyre-related matters, including tyre recycling.
In the next issue, we will be looking into tyre retreading in the Africa market. Stay tuned for more updates.
About the author
John Stone is a veteran in the tyre industry. John writes on all things tire and automotive-related in Europe, South Africa and Asia.