Economics Tyre Recycling

Contract Report
Final Report
Economics of Tyre Recycling
by Neil Houghton, Katrina Preski, Nigel

Rockliffe and Dimitris Tsolakis
for Department of Environment and Heritage
RC3765- Final Report June 2004

for Department of Environment and Heritage
Reviewed
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RC3765- Final Report June 2004 information contained in
the Report.
Contents
SUMMARY ............................................................................................................6
PART 1. MARKET ANALYSIS ..........................................................................13
1 Introduction ...................................................................................................13
2 Background to prior studies...........................................................................16
2.1 Focus of this project ..............................................................................16
2.2 Consultation...........................................................................................17
Free-riding .....................................................................................................18
Level of benefit..............................................................................................18
Levy on earthmover tyres ..............................................................................19
2.3 An overview of the current situation .....................................................19
NSW ..............................................................................................................19
Western Australia ..........................................................................................20
South Australia ..............................................................................................23
Victoria ..........................................................................................................23
3 International experience ................................................................................25
3.1 Canada ...................................................................................................25
3.2 United States..........................................................................................26
4 Market segments............................................................................................28
4.1 Manufacture and import of new tyres....................................................29
Manufacturing materials................................................................................30
New tyre market size .....................................................................................30
Earthmover tyres ...........................................................................................30
4.2 New technologies/ applications .............................................................31
Surface modification .....................................................................................31
Rubber devulcanisation .................................................................................32
Pyrolysis ........................................................................................................32
Bioreactor landfill leachate management ......................................................32
Molectra.........................................................................................................33
4.3 Tyre retailers..........................................................................................33
4.4 Tyre collectors .......................................................................................33
4.5 Retreaders ..............................................................................................34
4.6 Tyre reprocessors...................................................................................34
Shredding and crumbing costs.......................................................................35
4.7 Road surfacing.......................................................................................35
Segment size..................................................................................................36
Scrap rubber in asphalt ..................................................................................37
4.8 Civil engineering applications ...............................................................38
Segment potential ..........................................................................................39
Resource recovery value of alternative Tyre Derived Products ....................39
4.9 Tyre derived fuel (TDF) ........................................................................40
Cement kilns..................................................................................................40
Cement Industry Federation ..........................................................................42
4.10 Tyre Derived Products (TDP)................................................................44
Manufactured products..................................................................................44
4.11 Tyre stockpiles.......................................................................................45
PART 2. ECONOMIC ANALYSIS......................................................................46
5 The market for scrap tyres.............................................................................46
5.1 Why a subsidy?......................................................................................46
5.2 What determines the level of recycling? ...............................................46
6 Method of analysis ........................................................................................49
6.1 Scrap tyre recycling model ....................................................................49
6.2 Supply....................................................................................................50
6.3 Demand..................................................................................................52
6.4 Results ...................................................................................................54
7 Non-payment of levy.....................................................................................56
7.1 What determines the level of levy non-payment ...................................56
7.2 Method of analysis ................................................................................56
7.3 Results ...................................................................................................58
Levy avoidance..............................................................................................58
Revenue implications ....................................................................................58
Appendix A Correspondence ................................................................................60
References .............................................................................................................63
Tables
Table 1. Existing/immediate term uses of waste tyres ...........................................9
Table 2. Potential usage of waste tyres.................................................................10
Table 3. Waste Tyres Volume (2004) ...................................................................13
Table 4. Waste tyres by tyre type (2001)..............................................................13
Table 5. Variation in supply of waste tyres by State ............................................14
Table 6. Fate of Waste Tyres by State..................................................................14
Table 7. End use market segments ........................................................................20
Table 8. Companies involved with used tyres in WA ..........................................22
Table 9. Used tyres in metropolitan Perth ............................................................23
Table 10. Summary of the tyre industry (estimate) ..............................................29
Table 11. Summary of the new tyre market in Australia......................................30
Table 12. OTR tyre imports 2002.........................................................................31
Table 13. Fees received to collect tyres................................................................33
Table 14. Usage of recovered rubber in pavements .............................................35
Table 15. Scrap rubber penetration into PMB asphalt..........................................38
Table 17. Tyre usage in manufactured products...................................................44
Table 17. Components of supply cost ..................................................................52
Table 18. Determinants of demand forecast.........................................................53
Figures
Figure 1. Waste tyre stream..................................................................................15
Figure 2. Estimated geographical distribution of used tyres as a percentage of the
total produced in Western Australia ..............................................................20
Figure 3. Types of used tyres as percentage of total number generated in Western
Australia ........................................................................................................21
Figure 4. Canadian scrap tyre processors. ............................................................26
Figure 5. US scrap tyre utilisation, 2001. .............................................................27
Figure 6. Effect of subsidy on volume of recycling .............................................48
Figure 7. Logical flowchart of scrap tyre recycling model ..................................49
Figure 8. The production/value chain for recycling scrap tyres ...........................50
Figure 9. The production chain for scrap tyres.....................................................51
Figure 10. Demand for scrap tyres, showing impact of technology and price .....53
Figure 11. Proportion of scrap tyres going to landfill, as a function of levy-benefit
.......................................................................................................................54
Figure 12. Probability density function of proportion of scrap tyres destined for
landfill, as a function of levy-benefit.............................................................55
Figure 13. Demand for levy-avoiding tyres..........................................................57
Figure 14. Proportion of levy-avoiding tyres, as a function of levy-benefit ........58
Figure 15. Loss of revenue due to levy-avoidance, as a function of levy-benefit 59
Boxes
Box 1. Case study: Royal Mat, Quebec, Canada..................................................26
Box 2. Use of CRM and Spray Seal .....................................................................36
Box 3. Crumb rubber from tyres ..........................................................................37
Box 4. Use of scrap rubber in asphalt...................................................................38
Box 5. Value per EPU for selected end uses ........................................................39
Box 6. An economic model of scrap tyre recycling .............................................47
Box 7. Inappropriate disposal...............................................................................56
6
SUMMARY
Part 1 of this report provides an analysis of waste tyre generation in Australia and a range of
end-use segments for waste tyres. A stakeholder consultation process was used to build an
understanding of the operation of different market segments including critical driving factors
and cost structures. The limited time frame available for the Part 1 analysis has meant that a
comprehensive consultation process has not be feasible, and, as a result, the discussions,
inferences and implications contained in this report may not be based on full information.
Part 2 of this report contains an economic analysis of the waste tyre situation in Australia. It
shows how the level of subsidy affects the volume of tyres sent landfill. It also investigates the
consequences of non-compliance with a levy-benefit scheme.
Part 1 Market Analysis
Market analysis was undertaken to investigate two aspects of the waste tyre market. First, to
identify,
• the scope and extent of current end uses for waste tyres including critical drivers and
cost structures; and
• emerging technologies that could influence the operation of waste tyre end-use markets.
Second, to provide projections of the likely future potential of these (and other emerging)
market segments.
New technologies such as devulcanisation and surface modified offer a future potential to
increase the use of scrap rubber in plastic / rubber blends and thermoplastic products, although
there are no commercial operations at present.
Briefly, the market analysis has identified three broad target segments:
1. Waste tyre reprocessing into recovered rubber. This segment includes as number of target
applications that use recovered rubber as an input including:
• road pavements as rubber modified binders; and
• other applications for recovered rubber including manufacture of new tyres,
moulded products that typically are high volume and low technology, such as mats,
domestic products (flooring, carpet underlay, etc), and manufactured products such
as athletic surfaces, acoustic floors, and playground surfaces.
2. Waste to energy as tyre derived fuel. This segment includes the cement industry where
waste tyres are used as an alternative kiln fuel. There is considerable interest in a range
of alternative fuels.
3. Civil engineering applications. This segment includes a broad range of end uses such as
retaining walls, embankments, fills and geotechnical uses such as drainage and pipes.
Market analysis indicates that the current quantity of waste tyres is around 20.8 million
Equivalent Passenger Units (EPU) each year, representing a waste stream of approximately
197,000 tonnes pa.
In terms of current usage of waste tyres, the market analysis has found that around 49% of tyres
are disposed to landfill, 33% are reprocessed into recovered rubber (for a range of end uses),
10% are illegally dumped and 5% are used for waste to energy. Around 3% are used for
numerous other end-uses including civil construction.
ARRB Transport Research Ltd

7
Table 1 provides a summary of current usage estimates including non recovery/recycling end-
uses.
In terms of future potential for waste tyre end-uses, the market analysis suggests growth in the
use of waste tyres for civil construction, recovered rubber, tyre derived fuel and new
technologies that could open up new end-uses. The estimated breakdown of waste tyre fate
includes recovered rubber 45%, landfill 16%, tyre derived fuel 9%, civil construction
applications 9%, new technologies end-uses 15% and illegal disposal 5%.

8
Table 2 provides a summary of the potential demand for existing and new end use segments
based on information derived from industry consultations.
Part 2: Economic Analysis

An economic model was constructed to determine the impact that a levy would have on the
proportion of scrap tyres sent to landfill. In Australia about half of all scrap tyres are currently
disposed of to landfill. As shown in the report, this is because landfill is often the cheapest
option. The volume of scrap tyres destined for landfill in the model is determined as a residual.
For each recycling end use, the volume of recycling depends on three causal factors: the level of
subsidy, the demand for scrap tyres, and the supply of scrap tyres.
Impact of a levy
It was estimated that a uniform levy-benefit of $2 per EPU is sufficient to reduce the proportion
of scrap tyres destined for landfill to about 10%. This estimate is probabilistic; there is a 90%
probability that the proportion will lie between almost nothing and about 20%. Lower levels of
levy-benefit will result in higher proportions of scrap tyres being sent to landfill. For instance,
if there is no levy-benefit at all, we expect the proportion to be about 42%. This is lower than
the current level of 49% because technological change is expected to increase the attractiveness
of recycling even without a real price reduction in the form of a levy-benefit subsidy.
Levels of levy-benefit higher than $2 were not analysed as this amount is sufficient to cause
about 90% of tyres to be recycled, that is, all tyres within, say, 100 km of the major urban
centres, where recycling plants are likely to be sited. Refer to Figure 13 (reproduced in
executive summary below).
Impact of levy avoidance
Levy avoidance means that some tyres escape paying the levy while still receiving a benefit on
disposal. There are two impacts if some tyre suppliers (typically opportunistic importers) can
avoid the levy under a voluntary scheme: (i) levy-paying suppliers could lose market share; and
(ii) the levy-benefit fund may experience a shortfall. It was estimated that a uniform levy of $2
is sufficient to raise the market share of levy-avoiding tyres from under 5% (currently
estimated) to almost 7.5%. There is a 90% probability that this proportion will lie somewhere
between 6.5% and 8.5%. Lower levels of levy-benefit will result in a lower market share of
levy-avoiding tyres. It was also estimated that with total compliance, a levy-benefit of $2 per
EPU is estimated to collect up to about $40 million per annum in revenue. However, over $3
million per annum is estimated to be lost through levy-avoidance. Revenue losses are smaller
(both relatively and absolutely) for lower levels of levy-benefit.
Because revenue is lost in this way, it might be thought that any levy charged would have to
exceed the benefit paid. However, some tyres are ineligible to receive a benefit. For instance, at
a benefit of $2, about 20% of tyres are still not recycled. Thus only 80% of tyres receive a
benefit at all. Because these two effects—levy-avoidance and recycling—act in opposite
directions, they tend to cancel out. The net effect is that a $2 levy is more than sufficient to
fund a $2 benefit, but the difference is not large. However, the higher the levy, the harder it is
to cover a given level of benefit with the same level of levy. Refer to Figure 15 (reproduced in
executive summary below).

9
Table 1. Existing/immediate term uses of waste tyres

Current waste stream 20.8m EPU pa 197,000 tonnes pa
End use Quantity Comments

Tyre Derived Fuel (TDF) 10,000 tonnes of used tyres Currently, only Victoria is operating a tyre-
pa estimate fuelled kiln.
1 million EPU pa Future potential depends on tyre chip
availability.
5%
Recovered rubber 30,000 tonnes of rubber Recent new entrants increasing capacity.
crumb pa
(ie rubber crumb, shred, Victoria and NSW are the largest
granules, chips and 6.8 million EPU pa reprocessors.
powder primarily used to
make Tyre Derived WA and Qld are smaller reprocessors.
Products (TDP))
Road pavements 1,000 tonnes pa estimate Recovered rubber in asphalt and spray seal.
(recovered rubber used)
210,000 EPU pa VIC and NSW are major users.
Total recovered rubber:
33%
Civil engineering 200,000 EPU pa Currently small usage with significant
applications opportunity for expansion.
1%
Transformed rubber (ie None Technologies not at commercialisation stage.
some chemical or other
transformation or
modification process
such as devulcanisation,
pyrolysis or surface
modification)
Export 490,000 EPU pa International demand for casings likely to
remain stable
2%
Landfill 10 million EPU Primary objective is to redirect tyres away
from landfill.
49% estimated
The landfill estimate does not differentiate
between the proportion of tyres from
remote/rural areas and those from
regional/city areas. The number of tyres
directed to landfill from remote/rural areas is
expected to be higher than those from
regional and city areas.
Illegal disposal 2 million EPU pa Estimated.
10% estimated
Retreading 450,000 truck tyres pa Likely to remain stable (and possibly grow) as
there is a consistent demand for truck retreads
1.8 million EPU and the heavy vehicle fleet size increases.
Stockpile 20 million EPU estimate Numerous stockpiles throughout country
mostly in regional locations.
Note: This table contains quantities in the form of EPUs, tonnes and numbers of tyres. These are compiled from
estimates from a range of stakeholders and sources.

10
Table 2. Potential usage of waste tyres

Current waste 20.8m EPU pa
stream increasing +2% pa
(estimated 22 million by
year 3)
End use Potential quantity Comments

Tyre Derived Fuel 20,000 tonnes tyres pa Potential doubling of TDF. Cement kilns appear
(TDF) 2 million EPU pa to be the only feasible short term option and
9% many are looking at other alternative fuel mixes.
Recovered rubber 40,000 tonnes rubber crumb Recent new entrants increasing capacity.
(ie rubber crumb, pa
shred, granules, chips 10 million EPU pa Victoria produces 10,000 tonnes pa.
and powder primarily NSW has recently upgraded capacity and a new
used to make Tyre facility is being opened in QLD.
Derived Products
(TDP)) WA produces around 1,500 tonnes pa and it is
estimated that QLD produces around 3,000
tonnes pa.
Road pavements 11,000 tonnes rubber crumb Recovered rubber in asphalt and spray seal.
(recovered rubber pa Successful trials of devulcanised rubber would
used) 2.5 million EPU pa see increase in use. Likely expansion into
asphalt pavements.
NSW - 6,000 tonnes pa

Total recovered rubber: 45% 1.4 million EPU pa (estimated)
Victoria – 5,000 tonnes pa

1.1 million EPU pa
(assume a smaller, 80% increase in use of
recovered rubber in pavements in Victoria
based on the road length ratio in these states).
Civil engineering 2 million EPU pa estimate Potential of up to 60% of waste tyre scheme
applications 9% depending on commercial success. Competition
for tyres with other end uses is likely to
constrain this potential.
Material reclamation 2 million EPU pa estimate Processing plants are planned.
and modification from 9%
new technologies
Bioreactor Drainage 1.4 million EPU pa Depends on development of bioreactor landfill
and Leachate (approx 1 million tyres) using shredded tyres as a leachate material.
6%
Export 500,000 EPU pa International demand for casings likely to remain
2% stable.
Landfill 3.6 million EPU Significant reduction by a factor of 3.
16%
Illegal disposal 500,000 EPU pa Assumes reduction by half.
5%
Retreading 450,000 truck tyres pa Likely to remain stable (and possibly grow) as
1.8 million EPU pa there is a consistent demand for truck retreads
and the heavy vehicle fleet size increases.
Stockpile 20 million EPU estimate Numerous stockpiles throughout country mostly
in regional locations.

11
Figure 12. (Reproduced). Probability density function of proportion of scrap tyres destined for landfill, as a function of levy-benefit
0.14
0.12
0.10
0.08
Probability
0.06
0.04
0.02
0.00
-2.00
46
-1.50 41
37
-1.00 34
Levy-benefit 30
-0.50 26
($/EPU)
0.00 21
17 Proportion destined for landfill (%)
10
0
Source: ARRB TR. Note: Gaps in the plots are an artefact of the software and should be ignored.

12
Figure 14. (Reproduced) Proportion of levy-avoiding tyres, as a function of levy-benefit

9%
8%
7%
Proportion of unlevied tyres
6%
5%
4%
3%
Mean
2% 5% percentile
95% percentile
1%
0%
0.00 0.50 1.00 1.50 2.00
Levy-benefit ($/EPU)

13
PART 1. MARKET ANALYSIS

Note: Some material has been removed from this report to protect commercial confidentially.
1 Introduction
The Atech Group report (2001) estimated the waste tyre volume in Australia at around 18
million equivalent passenger units (EPU) in that year. The generation rate for waste tyres was
forecast to grow in line with vehicle kilometres travelled and was projected to increase to in
excess of 21 million EPU by the year 2010 (Atech Group estimate, 2001).
Applying a simple growth rate of 2% per annum to reflect the underlying drivers including
population growth, vehicle ownership and vehicle-kilometres-travelled the waste tyre volume is
projected to be around 20 million EPU in 2004 and increase to 24 million EPU in 2010.
Discussion with various state Environment Protection Agencies and relevant Environment
Departments has led to an estimated waste tyre volume of 14.9 million tyres (including
passenger, light commercial vehicle, truck and machinery tyres, or 20.8 million EPU) in 2004.
Refer to Table 3.
Table 3. Waste Tyres Volume (2004)

Waste Tyre Volume Number of Units Source
NSW 4.2 million Department of Environment and Conservation
VIC 3.5 million VIC EPA
QLD 3.5 million QLD EPA
WA 1.7 million Department of Environment
SA 1.4 million SA EPA
TAS/ACT/NT 0.6 million Estimated
Total 14.9 million tyres (all tyre types)
The 2001 estimate of the waste tyre stream of 18 million EPU is equivalent to around
12.8 million tyre units, representing an equivalent of 170,000 tonnes of waste tyres generated in
Australia each year. Atech Group (2001) estimated that around 65% of tyres are generated in
the major urban centre (capital cities and major regional cities) while 35% are generated in rural
and remote areas. According to the Atech Group (2001), the dominant fate of waste tyres is
disposal to landfill (approximately 57%) with a further 13% disposed in an inappropriate
manner. In 2001 recovered rubber accounted for approximately 5% of waste tyres (Atech
Group, 2001).
The waste tyre stream consists of different types of tyres. As shown in Table 4 (which reflects
data from 2001), passenger tyres represent the largest component (55%) of this waste tyre
stream. If LCV tyres are included with the passenger tyres these are more than 75% of the tyres
available.
Table 4. Waste tyres by tyre type (2001)

Tyre Type EPUs Percentage Number of Units
Passenger 10 million EPU 55% 10 million tyres
LCV 4.4 million EPU 24% 2.2 million tyres
Truck 2.6 million EPU 15% 525,000 tyres
Machinery 1.2 million EPU 7% 120,000 tyres
Total 12.8 million tyres
Source: Atech Group ( 2001)

14
Of particular importance to the supply of waste tyres for use in new secondary markets and
existing end uses is the variation in both the supply of waste tyres and the variation in fate
across the states. See Table 5.
There is considerable variation across the States in terms of the fate of the waste tyre streams.
For example, on a national level, around 57% of waste tyres are disposed to landfill (according
to Atech Group, 49% according to recent stakeholder consultations) however, the range includes
a value of 25% for Victoria to a value of up to 100% for Tasmania and NT (see Table 6). There
are also likely to be significant variations in the numbers of tyres disposed to landfill in
remote/rural areas and regional/city areas. The number of tyres directed to landfill from
remote/rural areas is expected to be higher than those from regional and city areas where
alternative disposal options are more likely to be available.
Table 5. Variation in supply of waste tyres by State

Waste Tyre Supply
NSW 34% 6.1million EPU
VIC 25% 4.5 million EPU
QLD 18% 3.2 million EPU
WA 10% 2.3 million EPU
SA 8% 1.4 million EPU
ACT 3% 0.5 million EPU
TAS 1.5% 0.27million EPU
NT 0.5% 0.09 million EPU
Total 18.5 million EPU
Source: Table adapted from Atech Group ( 2001) with recent information from consultations with states included.
Table 6. Fate of Waste Tyres by State

Waste Tyre Fate Landfill Inappropriate TDF Recovery Unknown Interstate Transfer
NSW 50% 5% - 23% 22% -
VIC 25% - 30% 25% 20% -
QLD 45% 15% - 5% 35% -
WA 34% 15% - 2% 49% -
SA 90% - - - 3% 7%
ACT 33% - - - - 67%
TAS 100% - - - - -
NT 100% - - - - -
Source: Table adapted from Atech Group ( 2001) with recent information from consultations with states included.
In addition, used tyres are imported into Australia at the rate of 500,000 per year, and Australia
exports approximately 350,000 used tyres annually, based on ABS figures. A schematic
representation of this waste stream is provided in Figure 1.
Given the current rates of recycling, there is considerable scope for increasing the proportion of
waste tyres being directed into beneficial uses rather than landfill (and other inappropriate
disposal fates). As shown in the Tables above, between 11 – 12 million EPU are currently being
disposed to landfill, which provides a potential supply stream that could be redirected to
alternative secondary markets and end-uses. Two key factors would drive this redirection of
waste tyres: (1) higher landfill disposal charges and (2) supporting legislation and programs that
limits landfill disposal of tyres. Clearly a proposed levy-benefit scheme will be an important
driver in reducing disposal of waste tyres to landfill and encouraging redirection of waste tyres
to alternative beneficial end-uses.

15
Key Points
− 12.8 million (or 18 million EPU) waste tyres generated in 2001
− Equivalent waste stream of 170,000 tonnes in 2001
− Waste volume to increase by +2% pa
− 14.9 million (20.8 million EPU) waste tyres generated in 2004
− Equivalent waste stream of 197,000 tonnes in 2004
− End use distribution as follows
Landfill 49%
Inappropriate disposal 10%
Tyre Derived Fuel 5%
Recovered rubber/crumb 33%
Export 2%
Civil construction 1%
Retreading small
Figure 1. Waste tyre stream
Manufacture
7 m units pa Exports
Vehicles generating 350,000 units pa
New tyre (3%)
waste tyres
imports
6 million units pa
12.8 million units pa
Used tyre 18 million EPU
imports
500,000 units pa
Waste Stream
Landfill
49%
Other Disposal
13%
Tyre Derived Fuel
5%
Recovered rubber
33%
Stockpiles
Limited data.
Estimated at 20m units

16
2 Background to prior studies

In December 2000 a workshop of industry and government stakeholders agreed to a national
approach to waste tyres that should encourage re-use and recycling of tyres.
In 2000/2001 Environment Australia funded a consultancy project A National Approach to
Waste Tyres to investigate and analyse the scope and nature of the waste tyre problem in
Australia and to assess policy options to address the problem.
Following stakeholder comments on the original consultancy report, the Department of
Environment and Heritage prepared a short paper A National Approach to Waste Tyres:
Analysis of Policy Options to develop three product stewardship options for tyres further: (1) a
take-back scheme (where tyre manufacturers and importers take back and manage used or
exhausted tyres); (2) levy-benefit scheme (where a levy is imposed at the point of
manufacture/import or at the point of sale); and (3) tradeable certificate scheme.
After the release of this paper, the Joint Working Group on Tyres (JWGT, comprising the
Australian Tyre Manufactures Association, Australia Tyre Importers Group, Cleanaway and
Renewed Rubber) approached government with the desire to develop a voluntary industry
Extended Producer Responsibility (EPR) scheme. This concept was put to the Environment
Protection and Heritage Council (EPHC) in October 2003.
The EPHC asked industry to fully develop a proposal and present it to their April 2004 meeting.
The Department of Environment and Heritage has been facilitating the development of the
proposal through a series of routable meetings. These meetings bring together representatives
from JWGT, Australian Tyre Recycling Association (ATRA), Australian Tyre Dealers and
Retreaders Association (ATDRA), Cement Industry Federation (CIF) and the Motor Trades
Association of Australia (MTAA).
2.1 Focus of this project

This consultancy is intended to inform government in their continuing development and
evaluation of a levy-benefit scheme1 for waste tyres.
The purpose of the study is to investigate the economics of waste tyre recycling processes and
their end uses and to provide advice on the financial viability of potential markets for waste
tyres and the impact of a levy scheme on those markets.
The issue of non-compliance, should a voluntary industry-led scheme be established, also
requires evaluation. The non-compliance issue arises from the potential for manufacturers or
importers of tyres to elect not to participate in any voluntary levy scheme yet still derive the
benefits that such a scheme could enable. This behaviour is known in the literature as ‘the free-
rider ’problem.
This current project has been undertaken in a reduced timeframe to meet the needs of
government and as a result, comprehensive consultation with the numerous stakeholders has not
been possible. (Details of the consultations undertaken and contact details are provided in
Appendix B).
1
A waste tyre levy-benefit scheme is one whereby a levy or advanced disposal fee is imposed on
manufacturers and importers of tyres. The fees collected are then used to fund programs targeted at end of
life issues for waste tyres including benefits paid to recyclers or re-users of waste tyres and/or those
involved in the collection and transportation of waste tyres or to fund programs such as education,
research and development and marketing.
A levy benefit scheme can be part of a voluntary industry scheme or part of a mandatory scheme that is
supported by government legislation. Alternatively, a quasi-mandatory scheme whereby a voluntary
industry scheme is backed up by legislation to capture those who choose not to participate in the industry
voluntary scheme.
17
In addition there are other constraints to the analysis that should be recognised. First, the
available timeframe and project resources have not allowed the development of a dynamic
model to examine changes in tyre flows over time. Such a model could be developed but is
outside the scope of this current project. In combination with the limited consultation period,
this means that the report focuses on current market segments (where information could readily
be obtained) and does not provide a depth of analysis relating to the sustainability of future
segments. A very simple approach of an assumed ‘future market’ at a period in time somewhere
around the half-way point of the operational period of a levy-benefit scheme (assumed to be 10
years) was used to describe future market segment characteristics. A qualitative ‘sanity check’
was used to test the feasibility of the future assumptions.
It would also be very useful to develop different spatial models for different jurisdictions as well
as urban and rural locations. Resources did not enable such modelling to be undertaken and a
generic situation was used in the current analysis based on a typical metropolitan centre with
average transport costs within a 100km radius of reprocessing infrastructure. One example of
this constraint is the use of average landfill costs within the analysis. Clearly, average costs will
not necessarily reflect the actual situation in many cases, in particular remote areas where both
the availability of waste tyres and transport costs functions are likely to be significantly different
from other locations.
Furthermore, the analysis examined a uniform levy-benefit rate (for reasons of simplicity and
resource constraints) and did not look at the implications of differential levy-benefit scenarios.
Such extended analysis would clearly add value to the current scope of work.
Other key assumptions and constrains are noted in the body of the report in the relevant sections
of the discussion.
The consultancy has been undertaken as a two-stage process.
Stage 1 Market analysis: Stage 1 of the project involved an analysis of the existing and
potential market for waste tyres in Australia. The market analysis required identification
of waste tyre recycling processes and potential markets for tyre derived end products.
The market analysis also assesses the viability of secondary markets and the level of
subsidy necessary to achieve a high level of take-up of used tyres as a raw material for
new end products.
Stage 2: Economic analysis: Stage 2 of the project involved an analysis of the extent to which
different levy values may encourage or constrain redirection of waste tyres from landfill
to alternative acceptable uses as well as an assessment of the implications of free-riding
or non-compliance with a voluntary/industry based scheme.
2.2 Consultation
At the beginning of the project the client, the Department of Environment and Heritage
forwarded a letter of introduction to a broad range of stakeholders informing them of the current
project. A copy of this correspondence is provided in Appendix A.
Following this initial introduction, a range of industry representatives have been consulted to
inform all of the project tasks including current market characterisation, and identification of
market segments for used tyres. Due to the time frame for project reporting, the consultation
process has not been as comprehensive as would normally be undertaken. The results and
conclusions, therefore, should be interpreted in this light, recognising that additional detail,
insight and refinement would normally be determined through more extensive consultations
with stakeholders. Selected case studies are also used to elaborate aspects of specific end uses
and market segments.
Consultation was undertaken through a written survey, telephone interviews, and meetings and
site visits where possible. A sample of stakeholders form each of the major stakeholder groups

18
was selected for consultation. Broadly, the consultations included representatives from the
following groups:
− Manufacturers and Importers
− Tyre Collectors
− Tyre Recyclers
− Australian Tyre Dealers and Retreaders Association
− Tyre Retailers
− Reprocessors
− Industry Associations (Australian Tyre Manufacturers Association, Australian Tyre
Management Recycling Association)
− Tyre Derived Fuel Industry
− Government (State EPAs and environment agencies)
Free-riding
In worldwide terms, there is vast over-capacity for tyre production. Because of their high fixed
costs, tyre manufacturing plants must maintain their production levels even if they cannot find a
traditional market for what they produce. If their tyre manufacturing output cannot be sold in
traditional markets at retail level, or to existing wholesale customers, manufacturers can recoup
their fixed costs by selling the excess to an ‘entrepreneur’2 for export (so as not to upset the
pricing structure in the local market), at a discounted price. This ‘entrepreneur’ will then store
up such tyres to sell them into the most vulnerable markets.
The concern of local manufacturers and responsible importers who will comply with a voluntary
levy is that they are leaving themselves open to these ‘entrepreneurs’, who may accelerate their
export program into the Australian market. ATIG and ATMA state that the introduction of such
large volumes of cheap imports into the small Australian market even over a short period will
dramatically reduce sales of responsible producers operating with small profit margins, that
could significantly impact upon the commercial viability of the local tyre manufacturing sector.
The best present industry estimate is that between 85% and 95% of imports result from the
activities of members of either ATMA or ATIG, but this is only an estimate, as a number of
importers have refused to supply import details to ATIG. The real figures (and risks of parallel
importing or free-riding) will not be known until a compulsory scheme is introduced. At this
stage, anecdotal estimates of between 10% and 15% of imports are the result of the activities of
these parallel importers. This is clearly an area where further research is required.
ATIG and ATMA believe that parallel importation levels would not increase beyond present
levels if parallel importers were told that they must pay the same recycling levy as local
manufacturers before their tyres were permitted to enter the market.
Level of benefit
The level of benefit is not an issue that falls within the scope of this current project. However
some preliminary comments are provided based on the consultations undertaken.
Basically there are two approaches to determining the benefit level for acceptable waste tyre
uses: a flat benefit rate that is paid to all qualifying uses, and a differential benefit rate. A
differential benefit rate would generally apply where there the aim is to encourage certain
2
It should be noted that the reference to ‘entrepreneur’ is used as a shorthand convenience and does not
reflect on entrepreneurial activity in its real sense.
19
practices, such as encouraging end use options that result in better environmental outcomes
(EPHC, 2002).
During consultations with the recycling industry, several stakeholders affirmed the belief that a
differential ‘benefit level’ should be applied to reflect the end-use fate of tyres. Products that
reflect higher ‘value’ end uses such as manufactured products, should be treated differently
from those that reflect low ‘value’ end uses, such as TDF. Recyclers contend that a differential
rate would encourage and reward resource recovery (assuming that TDF is not a resource
recovery method since the resource is destroyed/burnt in the process).
By way of comparison, the Canadian tyre recycling scheme has a differential benefit rate. There
are two levels of benefit: a TDF benefit and a higher benefit level for other segments/end-uses.
Levy on earthmover tyres

A further issue raised during the project was that of earthmover tyres. Tyres can be measured
by weight or by unit (most commonly expressed as an Equivalent Passenger Unit: 1 EPU is
equivalent to 9.5kg). Most industry members use a unit value for passenger, light commercial
vehicle, truck and tractor tyres. For example, a collector will charge a certain value to collect
every used passenger tyre, and a higher value for every used truck tyre from a retailer.
If a levy system is developed on a unit value, special attention will need to be given to
earthmover tyres since these tyres are difficult to classify as they are not uniform in weight, and
can weigh up to 7 tonne.
2.3 An overview of the current situation

The limited time available for the consultation phase of this current project has meant that not
all stakeholders and states could be given the opportunity to provide responses.
NSW
The following overview of the current situation in NSW was provided by the Department of
Environment and Conservation as a submission to the consultation phase.
It is estimated that in NSW 60,000 tonnes or 6 million EPUs are disposed of every year,
representing nearly one-third of the total generation of waste tyres in Australia. Currently,
around 50% or 30,000 tonnes are recycled in NSW, while the other half is land-filled or dumped
illegally.
In NSW the key end use market segments include recovered rubber, waste to energy, civil
engineering and pyrolysis. Table 7 provides a brief overview of each of these segments.

20
Table 7. End use market segments

Waste to Energy Cement Kilns. Potential for Blue Circle Blue Cement at their Maldon Kiln.
Recovered Rubber There are two existing crumbers: Rubber Recyclers and Regenerative Rubber.
Potential end uses include road pavements (asphalt and bitumen), safety mats
(industrial and playground), sports pavements (athletic tracks, equestrian
arenas), tile and ceramics, adhesives, new rubber composite products (posts,
pipes, railway sleepers), used rubber composite products (oyster farms and
vineyards), lining or leachate management in landfills, soil and aggregate
augmentation, composting media, oil and organic capture material, explosives
and explosive stemming.
Civil Engineering Three key NSW players:
Ecoflex: civil engineering systems (including retaining walls, building
foundations, erosion control, sound barriers, breakwaters, artificial reefs)
Biofloat: evaporation pontoons (eg cotton growers)
Industrial Recyclers: underground retention/distribution of on-farm water.
Rubber/Plastic composites McCoy Global Resources
Pyrolysis A new and emerging technology subject to R&D. Key players:
EcoMat in NSW converting waste to fuel (process is called Thermolysis).
Various overseas technology groups looking to set up in NSW.
Molectra Industries in Queensland recovering Jet fuel, Diesel, Carbon black,
Activated carbon.
Western Australia
The following overview of the current situation in WA was provided by the Department of
Environment as a submission to the consultation phase.
It is estimated that the number of used tyres currently generated in Western Australia per annum
is approximately 1.7 million with approximately 1.25 million generated within the Perth
metropolitan area. In terms of EPU, this represents approximately 2.3 m EPU pa and 1.75 m
EPU pa respectively.
The majority of tyres (73%) are generated in the Perth metropolitan area with approximately
11% generated in the regional areas (Bunbury, Busselton, Geraldton, Northam, Albany,
Kalgoorlie-Boulder, Esperance, Port Hedland, Roebourne and Broome) and the remaining 16%
generated in the country areas. See Figure 2.
Country
16%
Regional
entres
11%
Perth
73%
Figure 2. Estimated geographical distribution of used tyres as a

percentage of the total produced in Western Australia
21
Figure 3 illustrates the estimated percentages of types of used tyres generated in Western
Australia based on the number of tyres and the number of EPUs respectively.
Truck Retreads Earthmoving/

4% Agriculture 1%
Heavy Eartmovig
Car retreads 1%
4%
Truck and Bus

6%
Imported 2nd
4%
Car
Commercial 64%
16%
Figure 3. Types of used tyres as percentage of total number generated in Western

Australia
For tyres generated in the Perth metropolitan area, it is estimated that, on a mass basis,
approximately 34% are landfilled, approximately 28% are retreaded or used for material
recovery, with 1% exported (nominal value) and the remaining 37% are used for acceptable or
approved end uses or dumped illegally. For example in 2003, over 7,600 tonnes of tyres were
disposed of to the 10 licensed landfills in the Tyre Landfill Exclusion Zone (TLEZ), who are
able to accept tyres.
The number of tyres that are reused or recycled in regional and country areas is considerably
less. There is no reliable data available on used tyre management in country areas. However,
there have been approximately 200,000 passenger tyres used in subsoil drains for salinity
control in the Kojonup area (180km south east of Perth), which in relation to the quantity of
tyres produced, is currently not very significant. There is also some limited retreading of
earthwork tyres.
A variety of practices are being considered by various companies for the reuse of tyres or
recovery of resources from tyres. However, none of these have been subject to any rigorous
sustainability or life-cycle assessment and most of these methods do not appear to be financially
viable without some financial assistance.
Retreading has probably accounted for most of the reuse of materials from tyres in Western
Australia. Approximately 100,000 truck tyres are retreaded in Western Australia. Recovered
rubber from the process of retreading has been used for the manufacture of secondary products
and has been used in bitumen for road construction.
One WA company has developed a rubber and steel recovery system for truck and bus tyres.
Approximately 42,000 truck tyres pa (equivalent to 8% of all tyres generated in the Perth
metropolitan area) are currently processed in Perth using this method. This rubber is primarily
used for playground and sports pavements.
22
Other than retreading, there is no other ongoing recovery and reuse of materials from used tyres
in Western Australia due to a range of factors. Two key factors are:
1. For used tyres generated outside the Perth metropolitan area (approximately 27% of the
total produced in WA), the large geographical distribution creates large transport costs that
will limit opportunities to bring the tyres to Perth for recycling or recovery. For the used
tyres generated outside the Perth metropolitan area (approximately 27% of the total
produced in WA, or around 1 million EPUs, or 9,600 tonne per annum), these issues are
expected to result in high unit costs of recovery of materials and/or energy than that in many
other parts of Australia.
2. The comparative low cost of disposal to landfill (around $2-$6 cost of disposal in some
landfills). It is anticipated that the Department of Environment will ban the burial of used
truck tyres, unless cut to 250mm in the metropolitan area (TLEZ) and the south west region
of Western Australia.
Table 8. Companies involved with used tyres in WA

Organisation Description
WAESCO Pty Ltd Uses bales of passenger and light truck tyres encased in concrete as building
blocks (walls) for houses and sheds; and as a floor base for piggeries.
S.T.E.G. - Save The Earth S.T.E.G is licensed by the DoE as a category 64 (class II putrescible landfill site)
Group at Brookdale. Tyres are landfilled in baled condition with the potential to be
extracted and used as a resource in the future.
Western Tyre Recycling A baler and shredder.
Tyre Waste WA A baler and shredder..
Reclaim Industries/Entire Reclaim Industries recycles (grind and refine) a range of truck tyres into
Rubber doormats, cricket pitches, playground mats, hockey pitches, dressage arenas,
bollards, speed humps, parking bay buffers.
Danwest Rubber Danwest Rubber is WA’s largest retreader of car tyres.
OTR Tyre Repair and Sales OTR (Off The Road) refurbish haulpac tyres for the mining industry.
Landfills licensed to accept tyres Metropolitan Area (S.T.E.G. – Brookdale, RCG Technologies – Neerabup,
Eclipse Resources – Neerabup, Waste Stream Management – Kwinana, SITA
landfill – South Cardup)
Country Area (OTR – Meekatharra, J.W. Cross & Sons – Bunbury, Brookton
Tyre Landfill – Brookton)

23
Table 9. Used tyres in metropolitan Perth

Fate Available Information
Passenger Tyres Truck and Bus Tyres Other Tyres
Landfill Approximately 9,000 tonne of used tyres There are currently no reliable figures No reliable
disposal (largely shredded and whole passenger available on the quantities of truck data available.
tyres) are disposed to landfill in the Perth tyres disposed to landfill.
metropolitan area. (current DoE database)
This is more than the estimated quantity of

used passenger tyres and passenger
retreaded tyres produced in the Perth
metropolitan area (8,300 tonne) and
approximately one third (on a tonnage
basis) of all used tyres produced in Perth.
Almost 90% of the used tyres disposed to

landfill (approximately 8,100 tonne) are
currently disposed at the Wastestream
landfill, Kwinana (Ranka Katour, DEP,
pers. comm.).
Material Other than retreading, no significant Approximately 42,0000 truck and bus No known
recovery material recovery and reuse. tyres. (210,000 EPUs) are processed significant
and re-use per annum recovery and
reuse.
Retreading Approximately 37,000 passenger tyres Approximately 100,000 truck tyres Not
(350 tonne) are retreaded in Perth per (4,750 tonne; 500,000 EPUs) are undertaken.
year (less than 5% of the used passenger retreaded in Perth per year.
tyres).
Approved No reliable data available. No reliable data available. No reliable
use data available.
Illegal No reliable data available. No reliable data available. No reliable
dumping data available.
Export No reliable data available. No reliable data available. No reliable
data available.
Source: Technical Report – Management of Used Tyres in WA for Department of Environment – TJ Waters
Environmental, August 2003. Provided by the Department of Environment.
Note: Some material has been removed from this table due to commercial confidentially.
South Australia
The following overview of the current situation in SA was provided by the Environment
Protection Agency during the consultation phase.
The number of waste tyres generated in South Australia is of the order of 1.4 million pa.
Around 90% of these tyres are disposed to landfill. A small number of tyres are transported to
Victoria for use as waste-to-energy. All waste tyres must be shredded before disposal in landfill
– the only exception is large earthmoving tyres in remote areas where there is no shredding
facility.
South Australia is developing a waste policy that emphasises Extended Producer Responsibility.
South Australia operates a tracking system that uses a multi-part form (similar to contaminated
soil or transport of waste oil) to prevent illegal dumping.
A key constraint to increasing the scope for tyre recycling in South Australia is the small
number of tyres which critically hinders the economic viability of a waste tyre recycling plant.
There are only two existing retreaders and rubber reprocessors in the state, and there is limited
‘boutique’ applications.
Victoria
The following overview of the current situation in Victoria was provided by the Environment
Protection Authority and EcoRecycle during the consultation phase.

24
Victoria has a small and efficient tyre recycling arrangement in place, but still has a waste tyre
problem. Waste stockpiles exist and the EPA has previously issued abatement notices relating
to stockpiles. Some stockpiles in excess of 50,000 tyres exist.
Ecorecycle is active in product stewardship programs and has provided market development
grants ranging from $5,000 to $25,000 (for an end use involving non-slip surface in dairy
farms), as well as infrastructure funding for a recycling facility. EcoRecycle frequently receive
technology grant requests from Asia.
There is interest from a number of regional waste management groups such as the Calder Waste
Management Group who is keen to establish a recycling centre in Bendigo.
Some landfill operators shred tyres and put the material into a separate cell in the event that
viable markets emerge. At present around 30% of Melbourne’s waste tyres (around 1 million
tyres pa) go to Blue Circle Southern Cement for use as an alternative cement kiln fuel.
The critical success factors for increasing the level of recycling relate to the provision of reuse
reprocessing infrastructure, reducing collection and transport costs, accessibility and consistent
supply of tyres.
EcoRecycle Victoria (2003) indicates that in 2001-02 around 13,000 tonnes of rubber tyres were
recovered. During 2002-03 this increased to 15,000 tonnes (representing around 3.2 million
tyres3) and an additional 5,820 tonnes from other rubber sources (including buffings, tread ends
and crumb).
During 2002/03 Victoria received about 10% of all rubber sources for reprocessing from
interstate.
In Victoria, the major end-uses (% by weight) for reprocessed rubber (from all sources, not only
tyres) in 2002/03 included:
• Surface products 33%
• Traffic control products 1%
• Fuel source 50%
• Automotive products 6%
• Adhesives 10%
3
Assuming 4.5 kg of rubber recovered from passenger tyre
25
3 International experience
This section provides a brief overview of selected international examples of levy-benefit
schemes for waste tyres. The discussion is not intended to provide a comprehensive review of
international experience, rather provides an international context for the design and
implementation of effective recycling schemes for waste tyres.
3.1 Canada
Canada has one of the most advanced tyre recycling schemes in the world4. Tyre recycling
schemes are run at the Province or Territory level, rather than at the national level. Nine
Provinces and one Territorial Government now operate centrally coordinated scrap tyre
recycling programs.
Commonalities of the systems include:
− Financial support for each of these systems is based on a levy, or environmental fee,
charged on new tyre purchases in the jurisdiction concerned.
− Levies across the country for passenger tyres presently range from $2.00 to $5.00, while
sales of larger truck tyres may involve a higher fee, based on rim size (for example in
Newfoundland and Labrador a $3.00 levy applies to tyres with a rim size of up to17 inches
and a $9.00 levy applies to tyres with a rim size greater than 17 inches to a maximum rim
size of 24.5 inches).
− In some instances, the tyre recycling system is managed by a Government Ministry,
Department or 'Crown Corporation.' In other jurisdictions, multi-stakeholder 'Stewardship
Boards' or similar agencies carry the central program responsibility. Levy funds are used in
a range of ways. For example, in Saskatchewan, around 50% of funds are applied to
transport, 40% to processing and 10% towards administration.
Industry representatives and other non-government stakeholders are actively involved in tyre
recycling across Canada. In some cases, the scrap tyre program itself is one of several different
operations managed by a large 'multi-material' recycling agency.
The range of end uses for recycled tyres is growing steadily. Current examples include a variety
of construction materials, truck bed liners, vehicle mud flaps, livestock mattresses, industrial
floor mats, noise suppression equipment, roadside pylon supports and engineered rubber bases
under 'astro-turf' playing fields. A case study of one Canadian company manufacturing matting
from old tyres is provided in Box 1.
Less than 15% of the scrap tyres collected through Canada's existing programs are now used for
burning as tyre derived fuel (TDF) (refer to Figure 4) as a result of the Canadian emphasis on
finding new 'value-added' applications.
Each Province/Territory has a different tyre recycling scheme, that results in variations between
Provinces in both the levies charged and the benefits paid. Some Provinces have a differential
benefit rate while others have a fixed rate for all segments of the industry/end uses. For example
in British Colombia, use of tyres as crumb or shred attracts benefits of $183 to $60 per tonne of
rubber depending on the degree of processing and types of products produced, while use for
TDF attracts a benefit of $85 per tonne for whole tyres and $110 per tonne for shredded tyres
(Government of British Columbia, 2004).
Alberta also has a differential benefit program which attracts benefits of $150 - $100 per tonne
for crumb or shred rubber, however the funding of whole tyre TDF used in Alberta was
discontinued in August 1995 (Tyre Recycling Management Association of Alberta, 2004).
4
See the Canadian Association of Tire Recycling Agencies (CATRA) at
http://www.catraonline.ca/index.html
26
Figure 4. Canadian scrap tyre processors.
Molded
Crumb (processes (manufactured
materials for products)
recycling) 33%
24%
Die Cut Bailed (raw

(manufactured materials for
products) manufacturing)
11% 2%
Tyre Derived Fuel Shredded (raw

13% materials for
manufacturing)
17%
Source: CATRA website, (2004)
Box 1. Case study: Royal Mat, Quebec, Canada

Royal Mat are a Canadian company who utilise waste tyres to manufacture matting for use in sports
facilities and playgrounds, and matts for livestock used in stables, vet clinics and the dairy industry. The
company has been around for 20 years. They export 70% of their products (500,000 mats) to the UK,
Switzerland, Germany, Japan and Central America. The company’s turnover in 2002 was $15 million
(profit of $7 million).
In Quebec, any organisation that uses waste tyres receives a subsidy of $1.25 per tyre. This is a flat rate
for all tyre-recycling industries, including the energy industry.
Source: Information provided by EcoRecycle, Victoria.
Summary
Canada operates a Levy-benefit scheme
− The range of the levy applied to the sale of new tyres varies between $2 and $5 per tyre
− A differential benefit is applied based on the degree of reprocessing and end use
3.2 United States

The US has no federally managed tyre-recycling program in place, however all but two States
have developed regulations and/or management programs for tyres. There have also been some
attempts by the Federal Government to encourage recycling. In 1991 the US Congress mandated
the use of ground tyre rubber in a prescribed percentage of highways that were funded by the
Federal Government. Several States began testing programs, however most States refused to
comply with the mandate.
Data over the period 1990 to 2001 from the Rubber Manufacturers Association in the US
indicate that the total number of used tyres that are recycled, reused or recovered has increased
from 24 million in 1990 to around 218 million in 2001. In percentage terms this corresponds to
27
an increase in the total number of tyres captured for end-uses from 11% (in 1990) to over 77%
in 2001. The Rubber Manufacturers Association also estimates that there are around 300m tyres
in stockpiles throughout the US in 2001.
Over the same period, there has been a change in the number of tyres used for specific end use
markets. While all of the major end use market segments have grown in total size, the number
of tyres used for TDF has fallen from 84% in 1992 to around 53% in 20015. This has primarily
occurred due to the development of the two other major end use segments – recovered rubber
(for use in tyre derived products) and civil engineering applications.
As shown in Figure 5 TDF is by far the biggest end use market. At the end of 2001, the total
number of scrap tyres going to an end use market reached 218 million, or 77.6%, of the tyres
generated annually. The three major markets include TDF, civil engineering and ground rubber
applications.
Figure 5. US scrap tyre utilisation, 2001.
US Scrap Tyre Utilisation, 2001
Unknown
Civil Engineering
13%
14%
Ground Rubber
12%
Landfill Tyre Derived Fuel

10% 40%
Export
5%
.Misc
Punched/Stamped 3%
3%
Source: Rubber Manufacturers Association, 2002.
5
Note: Percentages express total number of tyres captured for TDF compared to the total number of tyres
captured for reuse, recycling or some other end use. In 2001, 115 m tyres were used for TDF out of a
total captured stream of 218 m tyres. The total waste stream in 2001 was 281 m tyres.
28
4 Market segments
In this study a distinction is made between primary and secondary tyre markets. A primary
market is one in which assets are sold for the first time. For tyres, this is sale of manufactured
and imported tyres for use on the road. A secondary market is one where assets are resold. The
secondary market for tyres consists of reprocessors, recyclers and other end uses. There are a
large number of secondary markets that offer potential for reuse of the waste tyre stream.
Within these segments there are numerous current and potential applications. Discussions with
stakeholders has identified the following major secondary markets for used tyres:
− Tyre-derived fuel (TDF) / energy recovery
− Recovered rubber/ Tyre-derived products (TDP) /road surfacing
− Structural engineering applications / materials substitute
Each of these segments will be examined in further detail in the following sections of the report.
It should be noted that this list of secondary markets is not intended to be comprehensive. There
are many end uses for waste tyres including for example, retreading, export, applications in
agriculture (and other specialised uses in drainage) and landfill.
The main criterion for identifying major segments was the capacity or potential for offering an
end-of-life resource recovery option for waste tyres. Tyre retreaders, for example, are treated
separately because they do not provide an end-of-life resource recovery option. Retreading is
essentially a life-extension activity. Retreaders feed their tyres back into a primary (used tyre)
retail market following reuse and the retreaded tyres will find their way into the waste tyre
stream.
Table 10 (sourced from the Atech Group, 2001) provides a summary of the tyre industry.
Although the focus of this study is on the viability of secondary markets for tyres, it is
informative to briefly review the primary tyre market and the various stakeholders in the
industry. Clearly, an understanding of the primary market will inform an understanding of
existing and potential secondary markets for tyres.
As shown in Table 10, the primary tyre market consists of two manufacturers (Bridgestone
Tyres and South Pacific Tyres), a number of tyre importers (although a small group of a dozen
importers account for 90% of total tyre imports) and an extensive network of tyre retailers.
The data in Table 10 is not current (reflecting year 2001) and there have been a number of new
entrants into the tyre recycling market in recent times. Combined with the clear commitment
between government and industry to achieve improved management of the waste tyre stream it
is likely that this momentum will continue as market opportunities become more apparent and
are targeted by niche businesses throughout the waste tyre value chain. Coupled with these
market opportunities will be a range of drivers and constraints that will influence the location,
performance and competition between stakeholders within the waste tyre sector. Of particular
importance is the current distribution of infrastructure across States. As clearly shown in Table
10 there is considerable variation in the availability of infrastructure across the States for
collection, transport and reprocessing of waste tyres.
The distribution of infrastructure for waste tyre management will be influenced by the large
capital cities of Sydney, Melbourne and Brisbane (which together account for over 50% of the
total waste tyre stream6) and the need to address regional and remote areas that also generate
considerable number of waste tyres.
6
NSW, Victoria and Queensland generate around 6.2m, 4.5m and 3.4 million EPU’s each year,
representing around 78% of the total tyre waste stream. Urban areas account for 65% of all waste tyres
suggesting that the three capital cities account for around 50% of all waste tyres.
29
Table 10. Summary of the tyre industry (estimate)

Location / ACT NSW NT Qld SA Tas Vic WA Total
Stakeholder
Manufacturers - - - - 1 (a) - 1 (b) - 2
Importers 70 ( c)
Retailers 900 3,200
Collectors
Large - 3 9 1 2
Other 3 20
Total 3 28 (d) 1 23 9 1 2 70
Shredders - 4 - 1
Retreaders
Passenger - 1 1
Truck 3 2
Total 3 50 3 3 7 3 4 2 75
Reprocessors
Rubber crumb - 3 - 2 1 - 2 - 8
Civil engineering - 2 - 1 - - 2
Waste to Energy - - - 1 (e) - - 1 (f) - 2

Source: Atech Group, 2001.
Notes:
Blank cells indicate no information; ‘-‘ indicates zero facilities
(a) Bridgestone Australia
(b) South Pacific Tyres
(c) of the 70 or more importers, 13 importers account for in excess of 90% of all tyres. .
(d)
(e) Also approximately an additional 200 who are licensed to transport hazardous materials and tyres.
(f) Queensland Cement
(g) Blue Circle Southern Cement
4.1 Manufacture and import of new tyres

There are two large tyre manufacturers in Australia: South Pacific Tyres and Bridgestone. Both
organisations are members of the Australian Tyre Manufacturers Association (ATMA).
South Pacific Tyres are also a large tyre importer, and one of the largest retreaders in Australia.
South Pacific Tyres owns approximately 400 retail stores across Australia (Beaurepairs and
Goodyear Auto Service Centres) with affiliations with 500 other stores.
Imported passenger tyres come from New Zealand (South Pacific Tyres), Thailand, USA,
Slovenia, Brazil, Japan, China, Germany, Korea, Turkey. Japan is the biggest tyre exporter.
Truck tyre imports come from Slovenia and Turkey. South Pacific Tyres is the largest importer
of tyres in Australia.
South Pacific Tyres have two manufacturing plants located at Somerton (in Victoria) and Upper
Hutt (in NZ), manufacturing passenger, light truck and recreational vehicle tyres. Bridgestone
has a tyre manufacturing facility in South Australia.

30
Manufacturing materials
A range of raw material inputs are required in the manufacture of new tyres. These include
synthetic rubber, natural rubber, tyre cord, butyl rubber, carbon black, steel cord, bead wire, zinc
oxides, chemicals and acids. These material inputs are imported and sourced locally.
The manufacturing process is expensive with high raw material costs. In rough terms, the major
components of the material input costs include synthetic rubber (which accounts for around 23%
of material cost), carbon black (accounting for around 20% of the material cost) and steel cord
and bead wire (accounting for around 17% of the material cost).
At present, around South Pacific Tyres use 5% recovered rubber in the raw material input mix,
primarily relating to technological constraints associated with the properties of vulcanised
rubber derived from recycled waste tyres. Bridgestone do not use recycled rubber in their
manufacturing process.
New tyre market size

Data on market size is presented in Table 11. In simple terms the total market can be divided
using three separate segments:
1. Tyres in use on the vehicle fleet
2. Tyres provided on new vehicles manufactured
3. Tyre replacement market segment
The data in Table 11 refers to the tyre replacement market and the data applies at the point of
manufacture or import, not sale.
Table 11. Summary of the new tyre market in Australia

Passenger Light commercial Truck Tractors
tyres vehicle(also some 4WD)
Size of the whole market 10,146,000 2,499,000 1,135,254 80,457
(total units per year,
2002/2003 financial year)
Market growth:
2001/2002 financial year 4% 2.9% 11% -12.3%
2000/2001 financial year 2.5% -3.6% 6% 22%
1999/2000 financial year 0.7% 7% 6% -15%
As shown in Table 11, the total size of the new tyre market is around 13.8 million tyres with
passenger tyres accounting for 73% of the total volume. Considerable variation in the growth
rates is evident particularly in light commercial vehicle and tractor tyres. Significant growth is
seen the truck tyre manufacture while passenger tyre manufacture has consistently grown at a
level below that of truck tyres.
Earthmover tyres
Earthmover tyres (also called ‘off-the-road’ (OTR) tyres) are used for vehicles in the mining,
construction, civil engineering, forestry, etc., industries. A typical example is a 240 tonne dump
truck, which is used in the mining industry. The truck needs 6 tyres, each costing $25,000, and
the tyre stands 3.5m high and weighs 3.2 tonne.
The OTR segment of the tyre industry is dominated by three tyre companies (95% of the
market): Bridgestone, Michelin and Goodyear. No OTR tyres are manufactured in Australia,
they are imported from Japan, Indonesia, Thailand and the USA.

31
OTR tyres range in size from quite small up to 4.0 meters in diameter and 7.0 tonne in weight.
Classification of OTR tyres is difficult because there is no industry standard so different
distributors/producers have different tyre classifications, for example Bridgestone have 13
different OTR tyre classifications.
Earthmoving tyres have a larger percentage of synthetic rubber than passenger tyres, so is not
suitable for manufacturing of recycled rubber products. There is no retreading of earthmover
tyres and limited recycling because these tyres built to operate in harsh conditions and are very
hard to break down. Transport costs to recover tyres from mining operations are large and on-
site shredding equipment requires a large capital investment. Currently tyres are disposed of on-
site after use and are either shredded or buried intact.
Due to the size of the product involved, quantity is not usually used as a measure of volume for
this range of tyre. Historically, volumes are recorded imports on a tonnage basis. The 2002
import statistics are provided in Table 12.
Table 12. OTR tyre imports 2002

State Estimated total market
volume (tonnes)
NSW 10,466
VIC 1,771
TAS 926
SA 1,428
QLD 15,020
NT 519
WA 17,043
Total 47,177
Based on value of goods for duty as declared to tyres imported.
4.2 New technologies/ applications

Consultations have identified a number of new technologies or applications that offer promise in
relation to waste tyres. They include:
− CSIRO surface modification technology
− Devulcanisation processes (including Pyrolysis)
− Bioreactor leachate management
Surface modification
CSIRO has developed an ‘enabling technology’ that enables recovered rubber to successfully
combine with other materials such as plastics. For example, a composite mix can utilise 50%
recovered rubber to replace plastic, offering an economic alternative to poly vinyl chloride
(PVC) plastics.
Recovered rubber is chemically inert and cannot be linked into other materials, so it is typically
only used in lower value applications. The CSIRO process provides a chemical modification of
the surface without changing the bulk properties of the rubber. The process can be tailored
depending on the end product market. Such surface treated rubber may be used in a broad range
of high-value applications such as shoe soles, automotive components, tyres, non-pneumatic
tyres, wheels, building products (roofing materials, insulating materials, window gaskets)

32
coatings/sealants, containers for hazardous waste, industrial products (enclosures, conveyor

belts, etc.) At present, the process has not been commercialised.
Rubber devulcanisation
Vulcanization is a thermal process that produces a cured cross-linked chain that bonds rubber
permanently using sulfur. Recovered rubber is chemically inert and cannot be used to form a
product. Devulcanisation means reverting rubber from its thermoset, elastic state back into a
plastic, moldable state. A range of processes have been described including chemical,
microwave, ultrasound and microbial devulcanisation approaches. Basically the process breaks
the di-sulfide bonds in the molecular structure and enables waste rubber to be used as a rubber
substitute. There are many advantages particularly enabling the use of a much higher
percentage of devulcanised rubber in product manufacture than is possible using vulcanised
rubber. As an example, the reuse of recovered rubber in new tyre manufacturer could increase
from the current limit of 5% to 10-15% (using devulcanised rubber).
In Victoria there is considerable interest in the use of devulcanised rubber for use in asphalt road
surfaces. VicRoads is currently investigating the use of devulcanised rubber because it offers
significant advantages in relation to the pouring of bitumen which has a particular window time.
Reducing these constraints provides contractor benefits relating to capital, labour and blending
process simplification. For example, if the average costs of a road gang are around $2000 per hr
then reducing the blend window time provides a benefit.
The consultation also provided a quick overview of a range of organisations in terms of their
market readiness and stage of commercialisation, which will not be presented here. In terms of
the potential to assist with the waste tyre problem in the short term it would appear that
significant activity in terms of technology development and commercialization would be
required before any significant influence on Australia’s waste tyre problem could be achieved.
Pyrolysis
Pyrolysis involves heating a shredded tyre in the absence of oxygen to decompose the tyre into
constituent products including carbon black, oil, gas, steel and inorganic ash. At present there
are no pyrolysis plants operating in Australia although industry comments have indicated that
R&D conducted in Queensland is looking at the feasibility of this technology. The keys are to
improve the economic viability of operations and the quality of the products produced.
The following summary of the potential use of constituent products from the Atech 2001 report
are still valid:
− Carbon black is used in a wide variety of applications including the rubber industry. Tyres
contain approximately 20% carbon black and around 10,000 tonnes are used in tyre
manufacturing each year. This material could be sourced from reprocessing around 25% (or
5 million tyres) of the waste tyre stream.
− Oil derived from pyrolysis is similar to diesel and can be used as a fuel.
− Steel derived from pyrolysis contains a range of residuals but would be consumed in a much
larger recycled steel market.
Bioreactor landfill leachate management

Collex Waste Management have developed a process to use shredded waste tyres within their
leachate and drainage systems within a bioreactor landfill. Information is available at the
following URL http://www.collex.com.au/innovations/bioreactor (accessed April, 2004).
The Ti Tree bioreactor system consists of a number of cells constructed within a disused quarry
site. One of the critical design parameters for an anaerobic bioreactor landfill is management of
the moisture content. The leachate management system consists of a matrix of trenches that are

33
filled with compressed shredded waste tyre material. Piping within the trenches enables the
distribution of the bioactive leachate throughout the cells and make the waste decomposition
occur quicker.
Molectra
Molectra is a small operation in Queensland that uses microwave technology. There is limited
information about the technology but basically the process separates the key components of a
tyre into separate rubber, metal and fibre material streams. The microwave heating process uses
temperatures of around 1300 degC to extract the various hydrocarbons from the rubber and
carbon black.
4.3 Tyre retailers

Generally, tyre retailers sell a tyre at a ‘fitted price’. Under a proposed levy scheme, the retailer
will include a levy cost in price of the tyre to the consumer. The number of replacement tyres
sold by each retailer varies considerably and may range between 10-12 tyres per day for a
smaller retailer, while larger retailers may sell between 50-60 tyres per day.
The total volume of used tyres can be estimated from the number of retailers operating and an
average sales volume for each retailer. In total there are approximately 3,200 retail outlets in
Australia comprising 1500 independent dealers, 350 Beaurepairs stores, 300 franchise licenses,
170 Kmart auto centres, and 250 Tyre Power centres. If we assume that each of these outlets
sells on average 15 tyres per day (typically on a one-for-one basis) then the total volume of tyres
generated is around 50,000 tyres per day, or 13 million tyres per year. The number of tyres
available for collection from retailers is therefore around 13 million per annum.
4.4 Tyre collectors

A number of organisations provide a waste tyre collection service to the tyre industry. The
consultation focused on the state of Victoria with the intention of gaining insight into the key
issues surrounding the process and cost of used tyre collection.
The large volume of replacement tyres from retailers are managed in a range of ways.
Typically, the larger tyre retailers have contracts with tyre processors or tyre collectors to pick
up used tyres. Collectors are generally subcontracted by rubber processors or the large tyre
retailers, however there are a number of smaller, individual operators. These arrangements are
State/region specific, depending on the number of tyre processors or recycling companies
operating in an area.
Tyre collectors receive a fee to collect waste tyres. The fee varies depending on location and
tyre type (see Table 13 – based on a small sample size). A number of smaller collectors also
provide this service to tyre retailers and auto centers. Discussion with industry sources suggests
that collection fees vary between $2 to $3 per tyre collected.
Table 13. Fees received to collect tyres

Passenger tyre Light Commercial Truck
Vehicle tyre tyre
Metropolitan Victoria Approx $1 $4
Metropolitan NSW (50km radius) $1.40 to $1.50 $4 $9
Regional Areas NSW (250km radius) $1.80 per tyre $5 $11
Remote Areas NSW When full truck loads are available the charge is
around $2 per passenger tyre.

34
4.5 Retreaders
Passenger tyres, recreational vehicle tyres (eg 4WD) and truck tyres are retreaded in Australia.
The market for retreading passenger tyres is declining as a result of competition from cheaper
imported tyres and safety concerns within the community. The truck tyre retread market is well
developed.
The average life of retreaded tyres depends on a range of factors including tyre maintenance and
conditions of use. As an average, light commercial vehicle tyres deliver 40,000 kilometres of
service, while truck tyre service life depends on the specific role of the tyre (as a drive tyre,
steer tyre or trailer tyre). Typically a new drive tyre delivers 120,000 kms of service, with a
retread providing a similar level of travel. A trailer tyre lifetime is longer typically around
260,000 km.
4.6 Tyre reprocessors

Tyre reprocessors receive a fee to accept waste tyres and reprocess them towards different end
uses. Discussions have been held with two tyre reprocessors.
Consultations revealed that initial capital investment for a tyre reduction plant was significant.
Initial the technology was based on a cryogenic/freezing process (using liquid nitrogen) which
cut waste tyres into chunks before moving into a freezing tunnel for shattering. The reprocessing
plant would accept and reprocess ‘buffings’ (offcuts and shavings from the retreading market).
This was advantageous since the buffings contained no steel which made the process steps
simpler. Since then there has been an emphasis on establishing new markets. This is necessary
for a range of reasons including the reduction in the size of the passenger tyre retread market.
Predominantly the retreading sector now retreads only truck tyres.
One reprocessing technology is called ambient grinding. This technology developed as a result
of: (1) changes in energy costs of liquid nitrogen which altered the economic performance of
this technology; and (2) the development of equipment with robust high tensile blades that
allowed whole tyres to be shredded and grinded. A benefit of the ambient grinding technology
is that the steel content in tyre can be separated. Currently the revenue received for steel from
waste tyres is around $130 per tonne steel.
Processing of recovered rubber produces a range of granule sizes depending on the target
application. For example, fine rubber crumb is used in a 5% crumb mix in the manufacture of
new tyres. This additive improves the air entrapment problem which arises during
manufacturing. Increased use in this end market is constrained by two key factors – the
constraint of the proportion of (vulcanised) crumb rubber and the tyre manufacturing capacity in
Australia. Recovered rubber is also used road surfacing that requires rubber chips or fine
crumb/powder. This segment is discussed in more detail in another section of this report. The
recovered rubber is typically required only in the warmer months when most road construction
occurs. Another application of recovered rubber is as component material in the manufacture of
carpet underlay (where it provides a very cheap filler that provides bulk and weight) and in
sports and leisure applications that require a coarser granule product. The range of applications
includes athletic tracks, hockey fields, sports and playground surfaces. An organisation called
Balsam Pacific based in Sydney serves the Asia Pacific market as a manufacturer and installer
of synthetic turf designed for tennis, football, field hockey, lawn bowls, turf, track and sports
fields (see http://www.balsam.com.au/ and the Sports Technology International website at the
following URL http://www.sti-sports.com/).
The remainder is shredded for civil engineering applications, and where there is no demand, put
into landfill.

35
Shredding and crumbing costs

Unit collection costs for used tyres vary due to a range of reasons principally location and
transport costs. There are a number of independent collectors who collect tyres from retailers
receive a fee to do so. The collector would then take the tyres to either a crumbed/shredder or a
landfill, depending on the cost of acceptance of tyres at these facilities. In Victoria for example,
only shredded tyres can be land filled, so shredding is an extra cost to the tyre collector.
Some countries including USA and Europe have been supplying Australia with granules at a
price of around $250 / tonne. In Australia, the finished product (recovered rubber) sells for
$500 / tonne - $700 / tonne depending on granule size. Depending on the destination, the
transport costs may be an additional $80 / tonne. Investigation of the imports and local crumb
markets was outside the scope of this study.
4.7 Road surfacing

The use of recovered rubber in pavements has been discussed with a range of stakeholders
including VicRoads, RTA and pavement research scientists at ARRB Transport Research.
At present the quantities and sizes used by VicRoads and the RTA are summarised in Table 14.
Table 14. Usage of recovered rubber in pavements

VicRoads 250 - 300 tonnes pa VicRoads use 30 mesh
RTA 450 – 500 tonnes pa RTA use 16 mesh (larger than 30 mesh)
The use of recovered rubber is pavements was investigated by the Australian Asphalt Pavements
Association (AAPA) to learn from their experience with recovered rubber in sprayed seals in
similar climatic conditions. A spray seal is a pavement surface treatment consisting of a sprayed
film of bituminous binder covered with aggregates. Trials were successful and the use of
recovered rubber is now a standard practice that delivers reliable performance in terms of
addressing the characteristics of pavement fatigue including the loss of stone and the onset of
cracking. In general the use of Crumb Rubber Modified binder (CRM) is targeted at pavements
under distress (ie cracked and near end of life). The CRM maintenance technique can give
added surface life.
There has also been a growing use of Polymer Modified Binder (PMB) although there are
reports of some application difficulties. PMB typically contains up to 6% by mass or volume of
Styrene Butadiene Styrene (SBS). SBS is not particularly stable and can degrade if there are
large haulage distances and time delays involved.
In contrast, CRM binder does not suffer from this disadvantage. Scrap Rubber Modified Binder
(or CRM) is formed by dispersing scrap rubber particles in bitumen. The particles are partially
digested and partially swollen by the adsorption of bitumen oils. In effect CRM is a competitor
to SBS. One advantage of CRM is that it can be added in the binder mix in concentrations up to
20% of mix when used in spray sealed applications.
In general there are two ways that CRM can be used in sprayed seals. The first involves the
transport of manufactured CRM to the onsite location where paving is to occur. The second is a
field preparation approach which is the generally preferred approach.
There are two basic processes for producing rubber crumb. One involves cryogenic (liquid
nitrogen) crushing and the other mechanical shredding. The mechanical shredding technology
produces a better product for CRM modified binder applications since the cryogenic processes
tends to result in a crystalline structure in the rubber which is not as efficient in the bitumen
digestion process. This reduces the elastic properties of the binder. However, the cryogenic
process is better from an impurity level. This is not a significant constraint as tyre reprocessors
36
have moved away from cryogenic technology to ambient grinding technology. A CRM
specification requires a minimum metal content (since this can be detrimental to the spraying
operation), and a specific particle size.
In the field preparation approach bitumen is delivered to site and a machine is used to
incorporate the recovered rubber into the binder. There is an ingestion process that requires
between 30 minutes and 60 minutes before the binder mix can be sprayed. This time period
modifies the CRM so that it can react with the bitumen more quickly. The different times are
due to different CRM particle sizes used.
Binder viscosity is a key characteristic and the absorption of oil from the bitumen improves
viscosity. The digestion process basically swells the CRM particles which enables them to
absorb more oils from bitumen which improves viscosity leading to a better pavement result.
Segment size
Box 2 provides a summary of many of the key parameters relating to the amount of CRM used
for each lane-km surfaced with spray seal. This will also enable an estimate of the total segment
size and potential usage. As shown, around 1.6 tonne of recovered rubber are required for each
lane-km constructed using a spray seal.
Box 2. Use of CRM and Spray Seal

Binder usage 1.5 to 2 litre per sq m
Film thickness 1.5 to 2 mm
Assumed pavement width 7.5m (ie 2 lanes)
Density of mix 1.1 kg/litre (equivalent to 1,100 kg per m3)
Mix usage per km (1000 x 7.5 x 0.002) m3 x 1100 kg/ m3 =
= 16,500 kg (16.5 tonne)
CRM at 20% mix 20% x 16.5 = 3.3 tonne CRM / km
= 1.6 tonne per lane-km
Hence, the current VicRoads usage of crumb rubber of 300 tonnes pa is equivalent to around 90
km (or 45 lane-km) of spray sealed road. Box 3 provides a summary of the parameters that
determine the number of tyres required to produce a tonne of rubber crumb. As shown, the rule-
of-thumb suggested is 240 EPU per tonne of rubber crumb.

37
Box 3. Crumb rubber from tyres

To determine the number of tyres required to produce a tonne of crumb rubber it is necessary to determine
the rubber content of the tyres used.
Typically 1 passenger tyre weights approximately 9.5 kg (when new) and 8 kg (when old). The rubber
content of a passenger tyre is typically around 30% synthetic rubber and 15% natural rubber. This total
rubber content of 45% means that around 4.5kg of rubber is available in a new tyre, and around 3kg of
rubber in an old tyre. Therefore, around 300 passenger tyres will be required to produce 1 tonne of crumb
rubber.
However, in practice a mix of tyre types, which have different rubber content, are used in the production of
crumb rubber. For example, if truck tyres are used to produce rubber crumb, then the extra weight and
higher rubber content needs to be considered. A typical truck tyre has a weight of around 45kg and a
higher rubber content of around 70%. A used truck tyre therefore is able to source around 24 kg of rubber
(equivalent to around 6kg per EPU). Therefore, around 180 EPU will be required to produce 1 tonne of
crumb rubber.
Hence, as a summary rule-of-thumb, this report suggests an average estimate of 240 EPU is required to
produce 1 tonne of crumb rubber.
Using the estimate of 240 EPUs per tonne of crumb rubber, the VicRoads usage of 300 tonnes is
equivalent to 72,000 EPU. Using a similar factor, the RTA usage is equivalent to around
120,000 EPU pa. Assuming the total usage in other states is around 50,000 EPUs pa, the total
market size is estimated at 240,000 EPU pa.
Scrap rubber in asphalt

The RTA and Resource NSW have prepared a business plan to commercialise scrap rubber
asphalt. Scrap rubber asphalt is a technically proven technology that is particularly suitable for
use in overlaying fatigue/cracked pavements. The Business Plan includes the development of
an industry standard Code of Practice including best practice guidelines for the manufacture,
handling and use of scrap rubber asphalt. Following on from this, modifications to the RTA
asphalt specifications will be undertaken to allow for the use of scrap rubber asphalt.
A key outcome of the Plan is the diversion of scrap rubber tyres from landfill. The Plan
proposes a set of RTA targets for the annual use of scrap rubber in asphalt and sprayed seals.
At present, in NSW, approximately 2.5 million tonnes of asphalt are produced annually.
Assuming 10% of this asphalt could eventually use scrap rubber from a 'dry' process (which
includes 2.5% scrap rubber by mass of total asphalt mix), around 6,250 tonnes of scrap rubber
would be used annually. Using the ‘wet’ process (where the binder contains at least 20% scrap
rubber by mass) around 4,000 tonnes of scrap rubber would be used annually.
Discussion with industry experts has suggested that this is the most likely application of
recovered rubber in pavements.
However, there is considerable focus on the use of recovered rubber in asphalt pavements.
Generally, the amount of recovered rubber that can be used in asphalt roads is of the order of
5% of the mix (compared with 20% of the mix in spray sealed applications).
Box 4 illustrates some of the key parameters relating to the use of recovered rubber in asphalt.

38
Box 4. Use of scrap rubber in asphalt

Asphalt Mix Density 2,200 kg per m3 (about twice the density of a spray seal mix)
Asphalt laid pa 6.5 million tonnes asphalt
Lane-km laid 110,000 lane-km
Tonnes asphalt per lane-km 59 tonnes / lane-km
Rubber content in mix 4 – 6% by weight of total mix
At 5% mix, tonnes of scrap rubber 3 tonnes / lane-km
The potential market size can be investigated by looking at different penetration rates of scrap
rubber binder as a substitute for PMB binder.
At present around 7.5% of lane-km of asphalt laid uses PMB Asphalt. This is equivalent to
around 8,250 lane-km. Table 15 summarises scrap rubber usage at different penetration rates of
scrap rubber into PMB asphalt.
Table 15. Scrap rubber penetration into PMB asphalt

Potential Penetration Lane-km pa Tonnes pa Tyres redirected
5% 5% x 8250 1,200 tonnes pa 288,000 tyres pa
25% 25% x 8250 6,000 tonnes pa 1.44 million
50% 50% x 8250 12,000 tonnes pa 2.88 million
There are additional costs relating to the use of scrap rubber in asphalt mixes. These have been
estimated at around $25 per tonne of asphalt mix. This is equivalent to around $25 per 50 kg
scrap rubber (calculated at a 5% mix), or around $5 per EPU.
4.8 Civil engineering applications

Used tyres are being utilised in a range of segments of the construction industry for applications
such as retaining walls, wall building blocks, rapid formwork or void filler, pavements and
access roads and erosion control. One such company is Ecoflex Australia, which provides a
range of engineered systems involving the removal of the sidewall of used tyres to create a
structural unit or container. The container void can be filled with crushed rock, gravel, sand or
soil, to form a structural building block or unit. These units can be combined in various cellular
arrangements and designed to perform basic engineering functions in accordance with
certifiable engineering standards and building codes.
Ecoflex applications are certified engineering systems that meet the relevant Australian
Standards and have been used in the construction of over 400 projects. The largest of these,
currently under construction on behalf of Energy Australia, will consume over 450,000 EPUs in
the construction of a 20 km access road. (This project represents 2% of the national annual
waste tyre stream ).
Ecoflex Australia indicates that their systems are able to deliver a cost advantage compared with
conventional construction methods. The Ecoflex technology involves a lower level of
technology investment compared to other levels of investment for tyre reprocessing, which
could assist the development of solutions to waste tyres in regional areas, and encourage local
civil construction activity.

39
Segment potential
There are many interacting factors that will influence potential segment size for civil
engineering applications. Some of these include competition for waste tyres as a resource for a
range of end uses, growth potential for civil engineering applications and market perception.
Detailed articulation of these factors (and others) is outside the scope of this current report.
Material from this section has been removed for reasons of commercial confidentiality.
Resource recovery value of alternative Tyre Derived Products

During the consultation phase of this project the issue of the relative resource recovery value for
alternative waste tyre end uses was raised by a number of stakeholders. Two of the consistent
points made were the need to consider the principles of the waste management hierarchy and the
need for a Life Cycle Analysis (LCA) of alternative end uses. There seemed to be a consistent
view, that end uses such as Tyre Derived Fuel recovered less energy that that originally used in
the manufacture of the tyres. As a result, one of the design principles to emerge was the need
‘to strive to recover the highest net resource value from used tyres’ as a means to rank
alternative end uses.
Stakeholders recognised that such detailed analysis is frequently data and time intensive.
Furthermore, alternative end uses such as energy recovery, materials recovery (reprocessing and
crumbing), tyre derived products and civil engineering applications have different investment,
revenue and cost structures that make comparison difficult. In practice, proxy values such as
selling price can be used to represent resource value (although these can fail to include
externality costs that are not captured by the market). Box 5 provides an example of a relative
value comparison for selected end-uses.
Box 5. Value per EPU for selected end uses

Energy Recovery
Energy equivalent $80 / tonne
Assume 115 EPU per tonne
Value / EPU $0.70 per EPU
Recovered Rubber
Value depends on particle size.
Assume $600 / tonne price
Assume 240 EPU per tonne of recovered rubber
Value / EPU $2.5 per EPU
Civil Engineering
Assume 1 truck tyre (5 EPU) per m2
Value / EPU $1 per EPU
Note: Some material has been removed from this box due to commercial confidentially.
A further discussion point raised in the consultation was the difference between recycling and
life extension. Stakeholders agreed that tyre retreading is an example of a life extension process
while there were alternative views regarding some potential civil engineering applications.
However, the main criteria that need to be considered is the extent to which a particular end use
provides a solution to the waste tyre problem (and therefore provides an environmental benefit);
reduces the need to consume natural resources; and value is derived from such an end use. The
authors of this report are of the view that (long term) civil engineering applications and tyre
derived products are consistent with this criteria set.

40
In terms of the operation of a potential levy-benefit scheme, it is clear that benefits should be
paid for acceptable end uses. One view presented was that end uses such as civil construction
projects may have a lifetime of less than twenty years and that tyres used in such projects could
be represented for a second call on levy funds. There is clear agreement that end uses such as
retreading are life-extension methods and should not therefore attract any benefit form a levy
benefit scheme. With regards to other end uses there are good arguments for providing benefits
for end uses including TDF, TDP, civil engineering in addition to other initiatives including new
technology development and Research & Development.
Noting that the national waste tyre scheme such as a levy-benefit scheme is intended to have a
limited lifetime (such as 10 years) then all end uses of waste tyres that receive a benefit should
provide an acceptable end use for this time period as a minimum.
Tyre derived products and civil engineering applications should exceed this minimum.
Consultations with civil engineering organisations have indicated that engineering applications
are intended as permanent civil construction projects with a design life of over 50 years. Such
construction projects are unlikely to be demolished within a 10 year period.
Civil construction projects that are required to meet civil construction standards and intended as
permanent structures, are unlikely to have life spans shorter than the intended timeframe of a
proposed levy-benefit scheme.
4.9 Tyre derived fuel (TDF)7

Consultation with representatives from the Cement Industry Federation, Blue Circle and
Adelaide Brighton were undertaken to build a picture of the extent and future potential of the
use of waste tyres for energy recovery.
TDF refers to the use of tyres as a fuel substitute for fossil fuels within purpose built furnaces
for cement kilns, power stations, smelters or paper mills. In Australia cement kilns are the only
TDF facilities operation. Used whole or shredded/chipped tyres are fed directly into the kiln
where the cement clinker is produced. Tyres are burnt at very high temperatures so there is very
little residue. The viability of TDF depends on tyre availability and energy price structures in
each state, which are highly variable.
There is an acknowledgement that TDF is not the ‘best’ solution to the waste tyre problem from
a waste management hierarchy perspective, but while other emerging markets develop, it is a
viable alternative, that has benefits over alternative options including landfill and waste
incineration.
Cement kilns
At present, the Blue Circle Southern Cement plant at Waurn Ponds in Victoria is the only
facility currently burning tyres for fuel. Plant management suggest that Warn Ponds has been
using around 1.5 million whole tyres for fuel for the last 10 years, however, this has recently
reduced to around 1m EPU pa. This is consistent with other industry estimates of around
10,300 tonnes per annum.
Tyres received at Waurn Ponds are stockpiled on site. The plant operates on a Just-In-Time
inventory system and typically has a stockpile of around 400 tyres. The tyres are fed from the
holding bay on a conveyor system that can discard tyres that are too damaged and can feed tyres
into the kiln at a variable rate (generally 3 to 4 tyres per minute) to manage the fuel load. The
control system weighs each tyre and calculates the energy content so that the tyre feed conveyor
is adjusted to provide the right energy balance for the kiln. Currently whole tyres are fed into
the back end of the kiln where combustion occurs at a temperature around at 900degC.
7
Material has been removed from this section of the report to protect commercial confidentially
41
The tyres pass into the back end of the kiln into a stable temperature zone called the calcining
zone (where pre-heating and decarbonisation takes place). The high combustion temperatures
mean that no residues need to be disposed – they can be incorporated into the clinker material
that is ground with gypsum to produce cement.
A key factor relating to TDF technology is the need to design plants to accept multiple
alternative fuels of a similar form factor. As a result the technology to burn whole tyres is
different from the technology required to burn tyre chips. The cement kilns suggest that a levy-
benefit scheme should be used to encourage production of tyre chip that can then be delivered to
the TDF door at the kiln. They further recognise that a fair levy-benefit scheme would seek to
encourage higher value uses.
A range of alternative fuels may also be used in cement kilns. These include carbon anode dust
from alumina industry, high viscosity oils (from a variety of sources that need to be tested and
analysed prior to use as a fuel), tallow residue/bottoms and demolition wood waste and furniture
offcuts.
There are a number of issues at Waurn Ponds that will impact future usage of waste tyres.
These include:
− Plant upgrades that will require a shift from whole tyres to tyre chips. The Waurn Ponds is
currently in the middle of a planned upgrade to include a tall preheater tower that uses the
heat produced by the kiln to preheat the raw materials as they move through the various
stages of the tower. The effect of this process change is that they will not be able to take
whole tyres (since they cannot be accepted into the pre-calcining zone). Other kilns such as
the Queensland Gladstone (QCL) plant are pre-calciner kilns which means they cannot take
whole tyres.
− Waurn Ponds currently burns truck tyres but cannot process earthmoving tyres as they are
too big.
− An alternative is to use tyre chips (around 50mm in size) however these need to be evenly
cut or sliced. The irregular sizes and shapes from shredding makes the feeding operation
more difficult. An added benefit is that this could be applied to large earthmoving tyres. An
important capability to encourage is tyre slicing operations that could continue to supply
tyre chip to Waurn Ponds.
Other cement kilns have conducted trials with alternative fuels. For example, the Berrima Plant
100km South West of Sydney initiated a trial of 3 alternative fuel sources (oils, carbon
electrode, tyres) as part of their planned plant upgrade in 2002.
Berrima does not have the facility to receive or burn whole tyres or chips but are in a process of
reviewing options.
Adelaide Brighton is an Australian wide cement manufacturer. They have an active alternative
fuels program and have trialled biomass, carbon powder (from the aluminium industry) and are
looking at the use of alternative materials such as slags (from the mining sector). They have
plants in South Australia at Port Adelaide and Birkenhead (both of which use natural gas as a
primary fuel). Birkenhead produces around 1.2 m tonne pa of clinker (which is milled with
Gypsum to produce cement). In Western Australia, the Cockburn plant operates 3 cement kilns
and one lime kiln using a 50:50 mix of coal and gas as primary fuel. The Dongara plant uses
natural gas. A plant in the Northern territory currently uses waste oil.
Adelaide Brighton is seeking up to 40% substitution target for alternative fuels but are
progressing cautiously to ensure environmental and quality issues are resolved. In particular
any change in fuel or technology in a kiln would require the development of a new computer
emissions model and emissions testing.

42
In summary, cement kilns are only viable option where there is a critical mass of tyres (in
capital cities or regional centres) that can be transported cheaply.
Cement Industry Federation

The Cement Industry Federation (CIF) provided a response to a series of questions during the
consultation phase of this project. Among the key factors identified include:
− The level of capital investment required to establish TDF facilities. Such investment
frequently competes with other projects offering a higher return than that available through
fuel cost savings. The cement industry expects a pay back within 3 years for such
investment.
− The need to improve public perception of environmental issues associated with the burning
of tyres. Community education and emphasis on the beneficial uses of TDF within cement
kilns is required.
− The low costs of landfill that acts as a constraint to directing tyres away from landfill
options.
Economic viability of TDF

The cement industry utilises waste tyres for their energy value and mineral content and provides
an end-of-life management process for waste tyres.
A survey of the US waste tyre market in 2001 by the US EPA indicated that the combustion of
used tyres for energy recovery (waste to energy) handled over 50% of the total US waste tyre
stream. In 2001, applications such as cement kilns utilised half this quantity (approximately 53
million tyres). Clearly the use of waste tyres for TDF in cement kilns is a significant end use
that should be encouraged to continue and expand within Australia to address the waste tyre
issue. Of course, as alternative end uses for tyres emerge that value tyres at more than the fuel
substitution benefit, then market forces are likely to send the tyres to uses other than cement
kilns.
There are a number of factors that need to be considered relating to the economic viability of the
continued use of waste tyres for energy in cement kilns in Australia. These factors include:
− The level of capital expenditure required to compete with other site projects that may offer
greater Internal Rate of Return. The return from projects that focus on alternative fuels is
derived primarily from the cost saving of the alternative fuel relative to a primary fuel such
as gas or coal. Hence, the recovery of capital expenses is an important guarantee sought by
the cement industry.
− The relative balance between additional operating costs (relative to other primary fuels)
associated with firing tyres, and the cost of a substituted primary fuel. These additional
costs include investment in infrastructure and control systems to manage the firing of tyres
within the plant. The plant infrastructure and control system needs to ensure consistency in
the energy per tonne and the chemical composition of the mineral content. The volume of
supply also needs to be consistent to achieve a constant feed rate. The cement industry
emphasises that the operating cost balance can only be achieved if waste tyres are received
‘Free In Store’ (that is with a zero gate fee).
− Consistency of supply in both volume and chemical composition of waste tyres is necessary
to ensure the cement kiln continues to produce a reactive product from which quality
cement can be made.
TDF market size

In 2002-2003 around 10,300 tonnes of waste tyres were utilised in cement kilns in Australia.
The market potential could be described in terms of a fuel substitution target for existing
43
primary fuels. For example, a 10% substitution target8 would require a supply of 85,000 tonnes
per year (CIF, 2004). This is equivalent to half of the total waste tyre stream each year in
Australia. This potential, however, will clearly be influenced by the development of alternative
end use markets for waste tyres that could well change the supply of tyres for TDF, as well as
technological constraints within the cement kiln plants.
At present only one kiln is currently accepting tyres as a fuel substitute. The types of
investment required to enable additional kilns use tyres as a fuel substitute would include capital
outlay for a feed and storage facility. The CIF estimate this cost to be around $1 to $3 million
per site. Since the capital cost will not change greatly with capacity the CIF recommends that
larger capacity kilns be established to ensure the greatest quantity of tyres can be handled for the
investment.
The CIF suggest a future vision for the cement industry including a number of large plants (say
6) regionally located, requiring a total investment around $10m. Operating cost savings based
on fuel cost advantages for waste tyres (requiring a zero gate fee in exchange for the capital
expenditure) would recapture the investment outlay over time.
New developments in cement kilns are likely to see a shift away from the use of whole tyres. In
particular the operation of a pre-calciner will mean that whole tyres cannot be used as a fuel
substitute. The required chipping operation would need to be developed within the waste
management sector of the supply line as cement kilns are not operated as waste management
centres.
Levy-benefit scheme
The CIF suggests that the levy-benefit scheme should focus on high volume proven
technologies such as TDF in cement kilns to divert waste tyres from landfill. Increasing the
quantity of tyres used for TDF would require the development of a number of plants in regional
areas. As noted above, a shift towards the use of tyre chips as a preferred form for TDF
facilities would require the waste management sector to make the necessary investments. It is
estimated that the cost to waste managers to prepare tyres by reducing the size (chipping) for
use in cement kilns, includes a capital cost estimated at $1.5mil and operating costs estimated at
$1.20 per tyre. Assuming a 10% primary fuel substitution target, capital recovery over a 3 year
period is available at a flat rate benefit of $0.70 per tyre.
The CIF suggest that the desired outcome of a levy-benefit scheme would be the establishment
of a lifecycle management program for tyres that supports existing end use options for waste
tyres.
The CIF suggest that levy funds should also be directed to activities including:
− Support of new technologies in the development stage.
− Development of transport processes and treatment facilities.
− Monitoring and discouragement of landfilling options.
− Administration and communication on the progress of the scheme aims.
Projected capacity
The CIF projects a future capacity of 85,000 tonnes (based on a 10% energy substitution target).
This also appears at the high end of likelihood.
Energy pricing structures, technology issues and future emphasis on a range of alternative fuels
suggests that the potential growth in the use of TDF in cement kilns will be less than this
8
The fuel substitution targets are based on the energy content of competing fuels. The energy content of
waste tyres is around 34 Gjoules per tonne (equivalent to around 34 Mjoules per kg, or 10 kWh per kg).
44
projection. Given that Waurn Ponds is the only kiln currently using TDF and their current
upgrade (which will increase capacity but remove their capability to burn whole tyres) it would
seem that a realistic estimate of future usage to be around 25,000 tonnes pa (equivalent to
around 2.5m EPU or 13 % of the waste tyre stream).
It would appear that the use of whole tyres in cement kilns as a substitute fuel is likely to
decrease as a result of kiln upgrades.
Whole tyres do not enable the same degree of control over burning temperature as other primary
fuels (such as coal or gas). Hence, the technology of cement kilns is moving towards 50mm
chips for greater control of burning temperature. Therefore, a critical success factor for
increasing use of waste tyres for TDF in cement kilns is the provision of tyre chips compatible
with kiln technology. It is not known whether current rubber reprocessors are able to provide
the tyre slices or if new facilities need to be developed within the industry.
4.10 Tyre Derived Products (TDP)9

There are a wide range of products that can be manufactured from rubber tyres. Many of these
products utilise recovered rubber as a material input to the manufacturing process.
Manufactured products
Waste tyres are used to manufacture a wide range of surfacing and roadside products including
footpaths, playground surfacing, safety mats (for swings, slides, etc), livestock mats used to
prevent injury and stop slipping (used in dairies, processing plants, etc), pavers, wheelchair
ramps, anti-fatigue matting for high traffic areas in factories, speed humps, speed cushions,
rubber curbing, crash barriers, guideposts, bollard bases, regulatory signage, etc. Guideposts are
made from whole tyres – the sidewalls are removed and the tyre is flattened out, however the
remainder of the products are made from recovered rubber. Tyre casing and tread produce
different quality of recovered rubber which is used in different products.
Recovered rubber can also be used as a ‘filler’ in industrial products. For example recovered
rubber is used in the manufacture of carpet underlay. The rubber is used as cheap filler that
provides bulk and weight. Recovered rubber can also be used to produce industrial adhesives.
Surfacing is a major business stream for recovered rubber. Surfacing includes playgrounds,
footpaths, flooring for stables, etc. An estimated 35 surfacing companies operating Australia-
wide (6 in Victoria, 15 in NSW, 7 in Queensland, 1 in Tasmania, 2 in South Australia and 4 in
Western Australia). Capital investment to set up a site pouring operation for surfacing is low
requiring minor equipment, a truck and mixer.
Moulded products is another important business stream manufacturing mats, pavers, speed
humps and cushions, crash barriers, etc. These manufactured products are made from more than
90% recovered rubber, with added binder and colour pigment if required (see Table 16 below).
Table 16. Tyre usage in manufactured products

Product Tyre usage
1 traffic cone base 3 tyres
1 safety (fall) mat 15-20 tyres
1 speed cushion 120 tyres
1m kerbing or speed hump (approx 15cm wide) 6 tyres
2
1m playground surfacing 15 tyres
9
Material has been removed from this section of the report to protect commercial confidentially.

45
4.11 Tyre stockpiles

It is difficult to estimate tyre stockpiles in Australia. This is due to lack of centralised record-
keeping, especially in regional and remote areas. There are also issues associated with what
constitutes a stockpile. Stockpiles can include illegally dumped tyres, industry stockpiles and in
some States (eg Victoria) there are dedicated landfill cells for tyres that could potentially be
extracted and used in secondary markets.
Stockpiles typically exist in remote locations which means that they can be expensive to remove
as a result of the large transport costs involved. Within Australia, legal collections of waste
tyres are licensed with specific conditions that constrain the total size. These aggregations are
not generally described as ‘stockpiles’. Some recycling operations contain large inventories of
tyres, and these are also not described as ‘stockpiles’. Stockpiles are usually described as illegal
dumps of waste tyres.
Discussions with industry stakeholders has indicated that there is no clear knowledge of the
extent of waste tyre stockpiles around the country. It would therefore be a useful task to develop
a questionnaire to all rural local governments to identify the extent of waste tyre stockpiles. In
Australia, the historical waste tyre stockpile has been estimated between 20 million and 50
million EPU. Goodyear, for example, estimates that approximately 20 million tyres are
currently stockpiled Australia wide (Goodyear, 2004).
There are large stockpiles of tyres in many countries. For example, the US Rubber Association
estimates a stockpile of 300 million tyres in the US in 2001. In that same year 281 million waste
tyres were generated (Rubber Manufactures Association, 2002).
Stockpiles arise from a number of reasons, the most important relating to the economic
incentives for illegal stockpiling and limited disincentives. There is a general widespread view
in the tyre industry that landfill charges are too low. In Sydney, for example, the landfill
charges for accepting shredded tyres are around $45 per tonne (approximately $0.45 per EPU).
In addition, the cost of shredding tyres is typically around $40 per tonne, suggesting that landfill
disposal fees would need to increase to limit the incentive for whole tyre illegal dumping. It is
expected that an increase in the disposal fee will also lead to an increase in illegal dumping.
Increasing education and commitment to environmental performance and responsible behaviour
has probably restricted the growth in the stockpile size in recent years.
As an example, the NSW Department of Environment and Conservation have indicated a large
tyre stockpile of the order of 200,000 EPU (consisting of mining tyres, truck tyres and assorted
other tyres) exists in Gilgandra NSW.
The management of waste tyre stockpiles is a difficult issue. There is also a general belief that
an acceptable use of levy-benefit funds is to target some proportion to reduce stockpile sizes on
a case-by–case basis. Special attention is required to deal with remote area stockpiles. The
encouragement of local recycling operations or other whole-tyre reuse options such as civil
construction could well play a role in managing the waste tyre stockpile issue. Generally,
recyclers receive a gate fee to receive waste tyres and this revenue is critical to their ongoing
economic viability. In the case of illegal tyre stockpiles, a compensatory benefit would need to
be made available to cover the costs associated with the collection, transport and receipt of
waste tyres from a stockpile. Without such a benefit, current recycling operations would be
severely constrained economically to accept and process waste tyres from stockpiles.

46
PART 2. ECONOMIC ANALYSIS

Part 2 examines how the level of subsidy affects the volume of tyres going to landfill.
Specifically, this Part ascertains the level of subsidy needed to achieve any desired level of
recycling; and investigates the nature, degree, and economic costs of non-compliance with the
regulatory arrangements required to fund and administer a subsidy.10
This Part is structured as follows. First, it explains how the market for scrap tyres functions.
Next, it sets out the method used to determine the proportion of tyres destined for landfill at any
specified level of subsidy. Lastly, the findings of the analysis are presented.
5 The market for scrap tyres
5.1 Why a subsidy?

In Australia about half of all scrap tyres are currently disposed of to landfill. As is shown later,
this is because landfill is often the cheapest option.11 There are therefore two ways to reduce
disposal to landfill, short of using coercion or relying on moral suasion. One is to raise tip fees
so that landfill is no longer cheapest; the other is to subsidise recycling so that it becomes
cheaper than landfill. Both have broadly the same effect: tyres that would otherwise end up in
landfill are recycled instead.
This report examines the subsidy option.12
5.2 What determines the level of recycling?

Theory suggests that scrap tyres will be recycled whenever they are worth more to recyclers
than they cost to supply; and furthermore that they will continue to be supplied in increasing
quantities until their value, as evidenced by what recyclers are willing to pay, declines to such
an extent that it equals the cost of supply. At that point, no more tyres will be supplied, since the
cost of doing so exceeds their price. In this respect, scrap tyres are much like any other
economic good.
But what does it mean, to supply scrap tyres, when they are unwanted by their owners?
Unlike most other goods, scrap tyres usually command a negative price. Far from recyclers
having to pay suppliers13 for tyres, suppliers usually pay recyclers to take the tyres off their
hands. This is because suppliers are not permitted to dump tyres at zero cost. If they could, scrap
tyres would never command a negative price; they would be dumped first.
This means that the cost of sending tyres to landfill sets a floor on the price at which scrap tyres
are supplied—or rather, it sets a ceiling on the price that recyclers can charge to accept scrap
10
The Brief (Request for Tender 3/2004) requires us to estimate the level of subsidy needed to achieve a
‘high level of take-up of used tyres’ but does not quantify a ‘high level’ (p 15). Our report therefore
allows the reader to specify the desired level of take-up. The Brief also requires us to ‘report on the
economic costs of non-compliance with a voluntary, industry-based scheme’ with emphasis on the impact
of ‘free-riding’ on those that comply.
11
Cheapest, that is, from the viewpoint of the private person or firm disposing of the tyres, not necessarily
from the viewpoint of society as a whole. However, it is private, not social costs that are relevant, as they
are what determine the disposal decision.
12
The Brief does not require us to investigate the alternative of raising tip fees.
13
‘Suppliers’ in this context are all agents that wish to dispose of scrap tyres, mostly dealers that fit new
tyres to vehicles, auto repair shops, and wreckers. They also include retreaders, who provide recyclers
with buffings, that is, the old tread that is ground off old tyres before the new tread is applied.

47
tyres. To illustrate, suppose scrap tyres cost P dollars a tonne to dispose of to landfill.14 Aware
of this, suppliers are willing to pay up to P to get rid of their tyres; and no recycler can charge
more than P to accept them. If recyclers pay more, they are paying over the odds as suppliers
would normally be prepared to supply for less; and if they pay less, suppliers will send their
tyres to the tip instead as it is cheaper. The price therefore settles at P.
Could the supply price rise above P? In a competitive market, normally no. This is because the
supply of tyres greatly outstrips the demand at a price of P. Recyclers have no incentive to raise
prices (that is, charge less to accept tyres) since they know they can get as many as they want at
that price.
But eventually there would come a point when supply becomes costly, or is even exhausted. For
instance, there is a limit on the annual supply of scrap tyres, which could only be exceeded by
importing (unlikely) or running down stocks (unsustainable). Before then the cost of supply
would rise as recyclers were forced to source tyres from ever more distant locations. About 35%
of scrap tyres are generated in rural areas. So, once the recycling market share exceeds about
65%, it will become increasing costly to transport scrap tyres to recycling centres, which are
likely to be mainly located on the metropolitan fringe. At that point, and not before, recyclers
would bid prices up above P, to a level determined jointly by the supply price and the
profitability of the recycling business.
Box 6 and Figure 6 illustrate the economic mechanism underlying the market for scrap tyres,
and show the effect of a subsidy.
Box 6. An economic model of scrap tyre recycling

Figure 6 is a graphical representation of the economic mechanism underlying scrap tyre recycling.
The curve labelled ‘Demand for scrap tyres’ shows what recyclers are willing to pay, and the curve labelled
‘Supply of scrap tyres’ shows what suppliers are willing to supply, at a given price.
The volume of recycling is determined by where the two curves intersect. We can increase the amount of
recycling by offering a subsidy. If payable to recyclers it makes them willing to pay more (shown by an
upward shift in the demand curve to its dotted position); if payable to suppliers it makes them willing to
supply at a lower price (shown by a downward shift in the supply curve to its dotted position). Either way, it
has the effect of increasing the volume of recycling by an amount determined jointly by the size of the
subsidy and the elasticities of demand and supply (that is, their responsiveness to price changes).
The size of the subsidy is given by the vertical displacement of the demand or supply curves, and its total
cost is given by the area of the hatched rectangle.
14
This cost relates to tyres disposed of at the supplier’s premises, and therefore includes transport to the
shredding machine, shredding (normally whole tyres cannot be dumped), transport to the tip, and tip fees.

48
Figure 6. Effect of subsidy on volume of recycling
Demand for scrap tyres

(with subsidy)
Supply of scrap tyres

(no subsidy)
Demand for scrap
tyres (no subsidy)
Supply of scrap tyres

(with subsidy)
Price at recycling plant

Quantity
Subsidy Total
supply of
scrap tyres
Recycled without Recycled only with Not

subsidy subsidy recycled
Source: ARRB TR. Note: Not to scale.

49
6 Method of analysis
6.1 Scrap tyre recycling model

In order to calculate the volume scrap tyres going to landfill, an economic simulation model15 of
scrap tyre recycling has been constructed (Figure 7).
Figure 7. Logical flowchart of scrap tyre recycling model
Demand-side factors
• Willingness to pay
• Price elasticity of demand
• ‘Technology impact’
Economic Volume of
Level of Volume of landfill
subsidy model recycling
Repeat for each end-use

• Tyre-derived fuel
Supply-side factors
• Recovered rubber
• Cost of transport
• Civil engineering
• Cost of processing
Source: ARRB TR.
End-uses
For modelling purposes three end-uses for scrap tyres are distinguished:
• Tyre-derived fuel (TDF)—shredded tyres used to fuel furnaces and kilns, mostly for
cement manufacture.16
• Recovered rubber—crumbed and powdered rubber as an additive to a variety of

manufactured rubber products such as new tyres, tiles etc.
• Civil engineering—significantly transformed tyres used for structural engineering

purposes such as retaining walls.
Causal factors
For each recycling end-use, the volume of recycling depends on three causal factors:
• the level of any subsidy
• the demand for scrap tyres
• the supply of scrap tyres.
15
This model is developed in Microsoft Excel and utilises the add-in capability of @Risk software
(Palisade Software).
16
Currently, whole tyres are used for this purpose in Australia. This practice will soon be phased out for
technical reasons, after which only shredded tyres will be acceptable. Our analysis is based on shredded
input.

50
One causal factor, the level of subsidy, is under policy control. The other two, demand and
supply, are characteristics of the particular end-use, and must be estimated before the volume of
recycling that results from any specified level of subsidy can be determined. Jointly, the causal
factors determine the volume of scrap tyres supplied to, and consumed by, each of the identified
end-use markets.
Volume of landfill
The volume of scrap tyres destined for landfill is determined as a residual. The approach
assumes that all tyres not recycled are either sent to landfill or disposed of inappropriately.
Currently about 10% of tyres are inappropriately disposed of. It is assumed that this will not
materially change.
6.2 Supply
In the absence of evidence to the contrary, and as a working approximation consistent with
economic theory, the approach assumes that supply is perfectly price-elastic (Figure 7). That is,
it is assumed that the marginal cost of supply of recycled product is unaffected by the quantity
demanded. Though an approximation, this inaccuracy can be accommodated by assuming that
the effective supply of scrap tyres consists mainly of those sourced from within 100 km of
metropolitan areas , say, 85% of total annual supply. The 15% of tyres sourced from beyond
that can be assumed to be too costly to recycle.
None of the identified end-uses takes whole tyres direct from the supplier; in all cases tyres first
pass through recyclers, who collect, sort, and (normally) process them into a form usable by the
end-user: these forms include shred, chips (under 5 cm across), granules (about 1 to 15 mm
across), crumb and powder (under 1 mm across). Because end-uses differ in the amount and
cost of processing required, there are large differences in the supply cost for different recycled
products (Figure 8, Figure 9, and Table 17).
Figure 8. The production/value chain for recycling scrap tyres
$
Processing consists of any
combination of shredding, chipping,
and grinding. Its cost depends on the
end-use to which the tyres are put.
Scrap tyres Freight Sorting Processing Freight Sales Recycler’s

(at negative inwards outwards revenue surplus
cost)
Source: ARRB TR. Note: Not to scale.

51
Figure 9. The production chain for scrap tyres
At Transport Dumping
supplier
Transport in Illegal
Recycling disposal
At
recycler
Sort
Sorted
Chip Shred
Chips Shred Landfill

Whole
tyre
Grind
Transport Transport Crumb

out out
Transport
out
Civil Recover-
TDF
eng. ed rubber
Source: ARRB TR.

52
Table 17. Components of supply cost

Required by end-use
Cost component Unit cost Recov. Civil
($/tonne) TDF rubber eng. Landfill
Freight (a)
Whole tyres 30 ! ! !! !
Reprocessed rubber 10 ! ! !
Processing
Sorting 10 ! ! ! !
Shredding 90 ! !
Crumbing / grinding 400 !
Chipping 150 !
Tip fee 50 !
Total cost ($/tonne) 200 540 70 190

Source: ARRB TR
Notes: (a) The analysis considered two types of trip: from supplier to recycler, and from recycler to tip. In the capital
cities, suppliers are located throughout the metropolitan area but recyclers and tips are nearly all on the fringe. Although
trip lengths naturally vary, the values in the table were determined by applying a single uniform rate of $30 per tonne for
transport of whole tyres, as collectors typically hold area-wide contracts that spread costs jointly over the urban network.
Per-tonne costs for transporting reprocessed rubber are lower at $10 per tonne as the product is more compact.
6.3 Demand
The proportion of scrap tyres going to landfill is determined by the quantities demanded by
other end-uses, which are in turn is determined by changes in technology and price. A
technology improvement manifests as a rightward shift in the demand curve; a price reduction
manifests as a movement along the demand curve (Figure 9). The approach relied on this
conceptual model to forecast the quantity of scrap tyres consumed by each end-use as follows.
• Step 1. As a starting point for the forecast, the current market was characterized in
terms of price and quantity largely on the basis of desk research. This gave us ‘price-
point A’ on Figure 10.
• Step 2. From a survey of knowledgeable stakeholders, forecasts for the ultimate market
share expected after 10 years were obtained. This subjective forecast subsumed changes
in both technology and price. This resulted in ‘price-point C’ on Figure 10.
• Step 3. From the same survey, estimates of the proportion of the increase in demand
that will be due to technological changes alone were determined. This resulted in ‘price-
point B’ on Figure 10.
• Step 4. From desk research the price elasticity of demand for each end-use was
estimated.
• Step 5. By applying standard economic theory to the above data, estimates of the
quantity demanded at any specified price, not necessarily the one implicitly predicted
by our survey respondents, could be determined.
Because the estimates gained from respondents are largely subjective and therefore uncertain,
the approach adopted characterised the estimates as triangular probability distributions, which
were embedded in a Monte Carlo simulation framework (Table 18).

53
Figure 10. Demand for scrap tyres, showing impact of technology and price
Price Price-point A
Current market
Price-point B
Forecast market with
no real price change
Price-point C
Forecast market with
real price reduction
expected by survey
respondents
Technology Price Quantity

effect effect
Source: ARRB TR.
Table 18. Determinants of demand forecast

Required by end-use
Inappropri
Recov. Civil ate
TDF rubber eng. Landfill disposal
Current market
Price ($/tonne) 30 400 0 Not req’d Not req’d
Market share 5.0% 32.0% 1.0% 52.0% 10.0%
Price elasticity of demand

Minimum 0.4 0.5 0.0 Not req’d Not req’d
Most likely 0.8 1.0 0.5 Not req’d Not req’d
Maximum 1.2 1.5 1.0 Not req’d Not req’d
Technology effect
Minimum 30% 10% 40% Not req’d Not req’d
Most likely 50% 20% 60% Not req’d Not req’d
Maximum 70% 50% 70% Not req’d Not req’d
Source: ARRB TR

54
6.4 Results
Given the method and assumptions set out above, we estimate that a uniform levy-benefit of $2
per EPU is sufficient to reduce the proportion of scrap tyres destined for landfill to a mean of
9% (Figure 10 and Figure 11). This estimate is probabilistic; there is a 90% probability that the
proportion will lie between 0% and 19%.
Lower levels of levy-benefit will result in higher proportions of scrap tyres being sent to
landfill. For instance, if there is no levy-benefit at all, it is expected the proportion to be about
42% (Figure 10 and Figure 11). This is lower than the current level of 49% because
technological change is expected to increase the attractiveness of recycling even without a real
price reduction.
Levels of levy-benefit higher than $2 were not analysed as this amount is sufficient to cause
about 90% of tyres to be recycled, that is, all tyres within, say, 100 km of the major urban
centres, where recycling plants are likely to be sited.
Figure 11. Proportion of scrap tyres going to landfill, as a function of levy-benefit

50%
Mean
45% 5% percentile
95% percentile
40%
Proportion destined for landfill
35%
30%
25%
20%
15%
10%
5%
0%
0.00 0.50 1.00 1.50 2.00
Source: ARRB TR.

55
Figure 12. Probability density function of proportion of scrap tyres destined for landfill, as a function of levy-benefit
0.14
0.12
0.10
0.08
Probability
0.06
0.04
0.02
0.00
-2.00
46
-1.50 41
37
-1.00 34
Levy-benefit 30
-0.50 26
($/EPU)
0.00 21
17 Proportion destined for landfill (%)
10
0
Source: ARRB TR. Note: Gaps in the plots are an artefact of the software and should be ignored.

56
7 Non-payment of levy
There are two kinds of non-compliance with legal and administrative requirements concerning
scrap tyres: inappropriate disposal (Box 7), and non-payment of the levy. This section deals
with the latter.
Box 7. Inappropriate disposal

Inappropriate disposal (that is, legal and illegal dumping) is an attractive option wherever the benefits
exceed the perceived expected cost of apprehension (that is, the perceived probability of being caught,
times the cost of the penalty). These certainly differ greatly by person and place, which explains why only
some people do it. For instance, dumping is probably more common in rural and remote locations. This is
because the benefit is high, as legal disposal requires a costly trip to the nearest legal tip (recycling is
typically unavailable); and the expected cost of apprehension is low, as enforcement is sparse.
Currently, about 10% of scrap tyres are dumped. Theory suggests this will fall as recycling becomes more
lucrative. But any change is likely to be small, since recycling is rarely an option in rural areas; there,
dumping competes mainly with landfill, whose costs are not expected to change.
It is worth noting that in some places so-called ‘inappropriate disposal’ may in fact not be inappropriate at
all. In some remote locations landfill may be simply unavailable; the social cost of disposing to landfill (let
alone recycling) may exceed the social cost of dumping. In that case, the efficient solution is to dump. This
implies some dumping is desirable; and to eliminate dumping altogether would cost more than it is worth.
A detailed assessment of the effect of a levy on inappropriate disposal lies outside the scope of this study.
7.1 What determines the level of levy non-payment

Under a levy-benefit scheme, the benefit (or subsidy) is funded by a levy on the good when it is
sold as new. Tyre manufacturers and importers contribute a sum to the fund every time a tyre is
sold, and the fund pays out a comparable sum every time a tyre is recycled.17
But what happens if some tyre suppliers (typically opportunistic importers) avoid the levy, as
could occur under a voluntary scheme?
There are two impacts. First, levy-payers are obliged to raise prices (or take a cut in profit).
Consequently, levy-evaders can undercut them at the margin (or take an increase in profit),
which increases their market share. The size of the increase depends on the cross-elasticity of
demand for levy-evading tyres with respect to the price of levy-paying tyres. The second impact
is on the levy-benefit fund itself. Suppose some tyres evade the levy but nevertheless receive a
benefit when recycled. This causes a shortfall in fund contributions that has to be made up by
those who do contribute.
The joint effect of these two impacts is to raise the cost differential between levy-paying and
levy-evading tyres, with a consequent detrimental effect on the market share held by levy-
paying tyres.
7.2 Method of analysis

We modelled the choices that consumers face when seeking to replace their tyres.
We assume there are two kinds of tyre: those sourced from levy-payers (‘levy-bearing tyres’),
and those sourced from levy-avoiders (‘levy-avoiding tyres’). Levy-payers are generally
members of the industry associations that support the levy-benefit scheme, and comprise the
two manufacturer/importers and the major retailers. Levy-avoiders are smaller retailers who
mainly import opportunistically.
17
Contribution to the fund could differ slightly from payouts because the fund would earn interest on
contributions and incur administration costs.
57
Currently consumers can purchase tyres either from levy-payers or from levy-avoiders. Once the
levy is imposed, however, the levy-payers pass on the levy but the levy-avoiders do not. This
manifests as a relative price decrease for levy-avoiding tyres, the effect of which is to shift the
entire demand curve for levy-paying tyres to the left (Figure 13). In this way levy-avoiders gain
an increase in market share without having to cut into their profit.
Figure 13. Demand for levy-avoiding tyres
Price
Demand for levy-avoiding tyres
Demand for levy-

bearing tyres
Before levy
Reduction
in relative Demand for levy-
price of bearing tyres
levy-
avoiding
After levy
tyres
Quantity
Increase in Reduction in
sales of levy- sales of levy-
avoiding tyres bearing tyres
Source: ARRB TR.
We based our computations on the following premises.
• Price of tyres. We estimate that levy-bearing tyres are priced at an average $100/EPU
before any levy is imposed, and levy-avoiding tyres at an average $80/EPU. An average
discount is required for levy-avoiding tyres as many are lesser-known brands. However,
we note also that our method of analysis is not sensitive to the assumed price.
• Market share of levy-avoiding tyres. We estimate that levy-avoiding tyres currently

account for 7.5% of imports.18 Imports account for 12.3 million EPU of a total market
of about 20 million EPU. Hence levy-avoiding tyres currently have about 4.6% of the
market.
• Cross-elasticity of demand. We estimated the cross-elasticity of demand for levy-

bearing tyres with respect to the relative price of levy-avoiding tyres as a triangularly
distributed random variable with mean 1.5, minimum 1.0 and maximum 2.0.
• Industry own-price elasticity. We estimated that aggregate demand for all tyres is
effectively inelastic; that is, aggregate tyre consumption is unaffected by a levy. An
18
Industry estimate of between 85% and 95% of imports result from the activities of members of either
ATMA or ATIG.
58
implication is that the consumption of levy-avoiding tyres can be determined as a

residual, given the consumption of levy-bearing tyres.
7.3 Results
Levy avoidance
Given the method and assumptions set out above, we estimate that a uniform levy of $2 is
sufficient to raise the market share of levy-avoiding tyres from an assumed 4.6% currently, to a
mean of 7.4% (Figure 14). This estimate is probabilistic; there is a 90% probability that the
proportion will lie between 6.5% and 8.3%. Lower levels of levy-benefit will result in a lower
market share of levy-avoiding tyres.
Figure 14. Proportion of levy-avoiding tyres, as a function of levy-benefit

9%
8%
7%
Proportion of unlevied tyres
6%
5%
4%
3%
Mean
2% 5% percentile
95% percentile
1%
0%
0.00 0.50 1.00 1.50 2.00
Revenue implications
Levy avoidance means that some tyres escape paying the levy while still receiving a benefit on
disposal. Thus, at a levy of $2 per EPU, about $3.2 million per annum would be lost through
levy-avoidance (Figure 15).
Because revenue is lost in this way, it might be thought that any levy charged would have to
exceed the benefit paid. So for instance, in order to cover the revenue lost through levy-
avoidance, the levy on levy-bearing tyres would have to be about $2.16 per EPU in order to
generate sufficient revenue to pay a benefit of $2 per EPU.
However, some tyres are ineligible to receive a benefit. For instance, at a benefit of $2, about
20% of tyres are still not recycled. Thus only 80% of tyres receive a benefit at all.
Because these two effects—levy-avoidance and recycling—act in opposite directions, they tend
to cancel out. For instance, at a levy of, say, $2 some 7.4% of tyres avoid paying the levy, but
about 20% are ineligible to receive it as they are not recycled. The net effect is that a $2 levy is
more than sufficient to fund a $2 benefit, but the difference is not large.

59
It should be noted that lower levels of levy are associated with lower levels of avoidance (which
raises relative revenue) and lower levels of recycling (which reduces relative expenditure).
Conversely, higher levels of levy are associated with higher levels of avoidance (which reduces
relative revenue) and higher levels of recycling (which raises relative expenditure). Thus, the
higher the levy, the harder it is to cover a given level of benefit with the same level of levy.
Figure 15. Loss of revenue due to levy-avoidance, as a function of levy-benefit

4.0
Mean
3.5 5% percentile
95% percentile
3.0
Levy revenue lost ($m/yr)
2.5
2.0
1.5
1.0
0.5
0.0
0.00 0.50 1.00 1.50 2.00

60
Appendix A Correspondence
Copy of initial correspondence sent by Environment Australia introducing the current project.
Dear Roundtable Members,

Study into used tyre recycling processes
The Department of the Environment and Heritage has commissioned ARRB Transport Research
Ltd to investigate the economics of used tyres recycling processes and end uses, and provide
advice on the viability of potential markets. In addition, ARRB Transport Research will look
into the potential issue of non-compliance with a voluntary, industry-led extended producer
responsibility scheme for used tyres.
The Department would appreciate any assistance you are able to provide ARRB Transport
Research to inform this study.
Part, or all of the study may become a public document in due course. However, in order to
allow Ministers to make an informed decision, ARRB may ask you questions that affect
commercial confidentiality. No information provided on a commercial in confidence basis will
be released publicly, or to any third party. The confidentiality provisions of the contract
between ARRB Transport Research and the Commonwealth are enforceable and prevent the
disclosure of any information your organisation might provide to any person other than the
Commonwealth during and after the project. When responding to ARRB, you should clearly
identify any material that is commercial in confidence, providing it is genuinely confidential in
nature.
The Department anticipates the release of a document outlining the findings of this study.
Findings of the study will be provided to Environment Ministers to inform their decision on a
scheme for used tyres in Australia.
Should you require further information please contact Dr Julie Quinn on 02 6274 1294 or
julie.quinn@deh.gov.au.
Peter Burnett
Assistant Secretary
Environment Standards Branch
Department of the Environment and Heritage

61
Appendix B. Questions used during Consultation

A semi-structured interview approach was used during consultations. Experience clearly
indicates that a one-to-one meeting is the best way to collect, interpret and refine information,
however this was not feasible given limited project resources.
The following set of questions were used to guide discussions and to seek additional detail
where required.
Question 1 of 6. Key Factors
Within your business what do you see as the key driving factors that determine or influence
the way tyre recycling and end use markets operate (for example, supply, demand,
competition factors, etc)?
Question 2 of 6. Segment Characteristics
Please comment on the viability of existing and potential markets for recycled tyres that you
are involved in or could be involved in?
Please describe the key characteristics of market segments you operate in (or would like to
operate in)? Provide data to indicate:
o Market size (units sold, revenue stream)
o Potential market size
o Changes in demand or size over time (is it decreasing, stable, increasing – please
quantify this)
o Are there other demand issues such as variability over time?
o What are the materials inputs (eg crumb rubber, granules) these segments need?
(indicate sources, volumes and costs of materials)
Question 3 of 6. Cost structure
The economic modelling component of this project requires an estimate of the demand curve.
Hence, we need to know something about an organisations willingness-to-pay for quantities of a
recycled rubber material.
To assist with this, please tell us about the cost structures in each market segment you operate
in. We are interested in the cost comparisons between crumb rubber (which may substitute for
other materials, or in the case of Tyre Derived Fuel, for other energy inputs).
It is possible that the cost structure will depend on the different types of crumb rubber (for
example by granule size). Hence, please provide information for the following questions for
each relevant crumb rubber segment?
o What are the prices you pay for material (or energy) inputs? (eg $ per tonne or $ Per
kWh)
o What are the prices you pay for recycled crumb rubber material? (eg $ per tonne)
o Indicate average unit costs relating to input materials, storage, warehousing, handling,
transport, processing, sorting, collection, manufacture.
o Please indicate level of investment and economies of scale relating to each segment?
o What are the transport costs to move waste tyres to a landfill facility?
o What are the transport costs to move waste tyres to a recycling/reprocessing plant?

62
Question 4 of 6. Geography
It is possible that the cost structures vary be location. For example, we know that energy prices
are different in different states and the viability of Tyre Derived Fuel from waste tyres is
therefore influenced by these characteristics. Other factors such as transport costs, for example,
may also imply the need for segmenting the market by geography.
o If the cost structures vary by location tell us about these variations and the segments for
which this is important.
Question 5 of 6. Quantities and prices

Various technology issues may determine the nature of the demand curve, in addition to price.
For example, some technological factors may limit the acceptable use of crumb rubber as a
material substitute.
Also, the quality of the recycle rubber may limit its potential application as either a virgin
rubber substitute, or as a substitute for some other material.
o For the relevant segments what percentage of material input can be accepted?
o Please tell us about the elasticity of the segment demand. For example, will the demand
for crumb rubber in a given segment change if price of the input material varies (or is
the demand inelastic)? If so in what way?
Question 6 of 6. Levy-Benefit Scheme

Do you regard the issue of non-compliance with a voluntary, industry-led scheme as being
significant? If yes, how can it be addressed? If not, why not? What size of levy (e.g. $1, $2, $5
per tyre) would be appropriate to provide a fund to increase market demand for the waste tyre
stream?
o How should such a fund be used/allocated?
o What level or levels of subsidy that would need to be paid to achieve, over time, a high
level of take-up of used tyres as a raw material for new end products? Indicate your
reasons.
o Do you think ‘free-riding’ will be a problem in a voluntary, industry-based scheme?

63
References
ARRB TR (2000) Crumbed Rubber in Asphalt – Literature Review, Prepared for Recycling and
Resource Recovery Council, ARRB Transport Research, Contract Report CR C5113
ARRB TR (2001), Crumb Rubber Asphalt Fatigue Study, ARRB Transport Research, Contract
Report
Atech Group (2001). A National Approach to Waste Tyres, prepared for Environment Australia,
June 2001.
Canadian Association of Tire Recycling Agencies (CATRA) 2004. Website,
http://www.catraonline.ca/can-rcl.htm (current at 14 April 2004).
EcoRecycle Victoria (1998). Market Development Case Studies: Rubber Products.
EcoRecycle Victoria (2003). Annual Survey of Victorian Recycling Industries 2001/2002,
February 2003.
EPHC (Environment Protection and Heritage Council) (2002). A National Approach to Waste
Tyres: Policy Discussion Paper. October 2002.
Goodyear (2004). Website: http://www.goodyear.com.au (current at 14 April 2004).
Government of British Columbia: Ministry of Water, Land and Air Protection (2004). Financial
incentives for recycling scrap tires (FIRST) program website:
http://wlapwww.gov.bc.ca/epd/epdpa/ips/tires/facts/facts.html (current as of 14 April 2004).
Rubber Manufacturers Association (US) (2002). US Scrap Tire Markets 2001, December 2002.
Tyre Recycling Management Association of Alberta (2004). Webiste: http://www.trma.com
(current at 14 April 2004).

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Contract Report

Economics of Tyre Recycling

by Neil Houghton, Katrina Preski, Nigel

for Department of Environment and Heritage

RC3765- Final Report June 2004

for Department of Environment and Heritage

Although the Report is

ARRB Transport Research Ltd

ARRB Transport Research Ltd

Part 2: Economic Analysis

ARRB Transport Research Ltd

Table 1. Existing/immediate term uses of waste tyres

End use Quantity Comments

ARRB Transport Research Ltd

Table 2. Potential usage of waste tyres

End use Potential quantity Comments

NSW - 6,000 tonnes pa

Victoria – 5,000 tonnes pa

ARRB Transport Research Ltd

ARRB Transport Research Ltd

Figure 14. (Reproduced) Proportion of levy-avoiding tyres, as a function of levy-benefit

ARRB Transport Research Ltd

PART 1. MARKET ANALYSIS

Table 3. Waste Tyres Volume (2004)

Table 4. Waste tyres by tyre type (2001)

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Table 5. Variation in supply of waste tyres by State

Table 6. Fate of Waste Tyres by State

ARRB Transport Research Ltd

Figure 1. Waste tyre stream

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2 Background to prior studies

2.1 Focus of this project

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Levy on earthmover tyres

2.3 An overview of the current situation

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Table 7. End use market segments

Figure 2. Estimated geographical distribution of used tyres as a

Truck Retreads Earthmoving/

Truck and Bus

Figure 3. Types of used tyres as percentage of total number generated in Western

Table 8. Companies involved with used tyres in WA

ARRB Transport Research Ltd

Table 9. Used tyres in metropolitan Perth

This is more than the estimated quantity of

Almost 90% of the used tyres disposed to

ARRB Transport Research Ltd

Figure 4. Canadian scrap tyre processors.

Die Cut Bailed (raw

Tyre Derived Fuel Shredded (raw

Source: CATRA website, (2004)

Box 1. Case study: Royal Mat, Quebec, Canada

3.2 United States

Figure 5. US scrap tyre utilisation, 2001.

US Scrap Tyre Utilisation, 2001

Landfill Tyre Derived Fuel

Table 10. Summary of the tyre industry (estimate)

Waste to Energy - - - 1 (e) - - 1 (f) - 2

4.1 Manufacture and import of new tyres

ARRB Transport Research Ltd

New tyre market size