Scrap tire recycling business is booming and providing fuel
By Joe Napsha
Published: Sunday, May 18, 2008,
Scrap tires are in demand, and recyclers are looking for ways to cash in.
The tires motorists drive on today can be shredded and used as fuel, burned to make fuel oil or pulverized into bits for fill in a football field or a playground.
"The market for scrap tires has grown in the past decade, and it is growing," said Michael Blumenthal, vice president for environment and resource recovery for the Rubber Manufacturers Association, a Washington-based trade group that represents about 100 tire makers and recyclers.
In 1990, only about 25 million of the 240 million tires that were discarded in the United States were recycled. By 2006, nearly 260 million of the 300 million used tires removed from rims were recycled, according to the association's report, "Scrap Tires in the United States."
One company fueling that growth is Liberty Tires Recycling LLC, a Downtown company that collects and recycles almost 25 percent of the scrap tires generated each year through its 14 facilities nationwide -- processing about 90 million tires a year. A dozen of its tire recycling plants are east of the Mississippi River, including one in Braddock, along the Monongahela River.
"They process more scrap tires than anybody," Blumenthal said.
Liberty Tires Recycling has been in the tire recycling business since 2000 and is the largest collector and recycler in the nation, said President Jeffrey D. Kendall. The company is owned by Laurel Mountain Partners LLC, which is managed by Kendall and partners Donald Rea and Andy Russell, the former Pittsburgh Steelers linebacker, who also operate landfills in Ohio.
Liberty Tires "knitted together a very large network of collectors and tire processing operations," Blumenthal said. They took their expertise in operating landfills and have applied it to tire recycling, he said.
The key to success in the tire recycling business is having a steady supply of scrap tires, the ability and knowledge to process the rubber and a reliable way of selling the processed scrap, Kendall said.
The privately-held company does not disclose revenue figures, but Kendall said the business is going well and they are looking to expand through buying five existing companies in other states. Sales have been strong this year, but Liberty Tires experienced a dip in the first quarter, which Kendall attributes to the nation's economic slowdown.
"The back-end of the market is blossoming, We're virtually sold out for 2008," Kendall said. Sales are expected to increase this year, from 5 to 10 percent, he said.
The Braddock plant, which Liberty Tires bought two years ago and improved with a capital investment, runs a 24-hour-a-day operation with about 35 of the company's 600 employees, Kendall said. It hauls in most of the 2.5 million tires it recycles each year but also serves some independent haulers, Kendall said.
It collects its tires from major tire chains and department stores, as well as auto dealers and service stations -- 8,000 customers in all at 14,000 locations nationwide, Kendall said. The company is looking to expand nationwide.
Once the tires are inside the plant, it takes less than 40 minutes from the time they are shredded until they are converted into crumb rubber and pumped into huge plastic bags weighing 2,000 pounds, Kendall said. The tires are cut into small pieces, then pulverized in hammermills that separate the rubber from fibers and steel belts inside the tires.
The company produced about 39 million pounds of the crumb rubber last year at the Braddock plant, and anticipates selling 44 million pounds this year.
Liberty Tires has nine operations that produce ground-up bits of tire used for tire-derived fuel. About one-half of its recycled tires product end up as fuel, which burns hotter and cleaner than coal, Kendall said.
Those are good end-markets to serve because "we're seeing continued growth in the overall tire-derived fuel and the ground rubber market," Blumenthal said.
But, there is less of a demand in the third major market for scrap tires -- civil engineering projects such as roads, construction and landfills, Blumenthal said. That's because the increasing cost of oil, gas and coal makes it more lucrative to sell the rubber chips for fuel that is burned to heat cement kilns, pulp and paper mills, industrial boilers and even waste-to-energy plants.
"The marketplace is working great. We are seeing a change in the market, but the numbers (of scrap tires recycled) are still going up," Blumenthal said.
While Liberty Tires already is recycling millions of scrap tires annually, a different kind of tire recycling plant -- one that burns shredded rubber to make carbon black and unrefined fuel oil -- is being proposed for an industrial park in Cumberland Township, Greene County.
Delta-Energy LLC of Monroeville, a spin-off company of the R.J. Lee Group of Monroeville, wants to build a 20,000-square-foot plant that would burn about 40 tons of shredded tires a day in a patented depolymerization process, said David James, senior vice president of operations for Delta-Energy.
The shredded tires would be burned in a vacuum-sealed system at low temperatures to create carbon black, which is used to tint plastics and to strengthen rubber, as well as a No. 4 fuel oil used in ships and industrial boilers, plus butane gas that could be reused in the process, James said. The patented process uses less energy and has a low level of emissions, James said.
Based on projections, the Greene County plant would produce about 1.7 million gallons of oil and 4,700 tons of carbon black a year. It would consume about 1.2 million scrap tire-equivalents a year, James said. The supplier of those shredded tires has not yet been determined, James said.
The Greene County Planning Commission last month gave conditional approval to plans for the plant, and an application for environmental permits is being reviewed by the state Department of Environmental Protection. Pending state approval, the company hopes to begin construction in the fourth quarter of 2008, with completion next year.
The Environmental Protection Agency is reviewing plans for the plant and recently requested more information from Delta-Energy, said Helen Humphreys, a DEP spokeswoman in Pittsburgh. The company still needs approval of a stormwater management plan. There is no timetable for the state to make a decision, she said.
Delta-Energy is in the final stages of completing financing for the project, James said. The privately held company does not release financial information.
Delta-Energy has proven the technology works because it operates a tire recycling plant near Berthold, N.D., a town of 450 people, 120 miles northwest of the state capital of Bismarck. Berthold, just about 100 miles from the Canadian border, is where company President Richard J. Lee grew up. His brother, Alan, manages the plant, said John Fjeldahl, a commissioner for Ward County, which includes Berthold.
"The North Dakota plant has been very successful. The market acceptance has been fantastic," James said. "We can (sell) any of the oil when we make it."
As for Delta-Energy's tire recycling plant in rural North Dakota, it is "good for the region's economy and good for the environment," Fjeldahl said.
"You don't see any pollution in the air from the plant," Fjeldahl said.
With agriculture as the primary driver of that region's economy, there are plenty of used tires that can be shredded and burned, Fjeldahl said.
While the technology has been used by other companies, it has not proven to be a commercial success, Blumenthal said.
"There have been many, many attempts at this. At the present, there are no commercially viable operations that are recycling tires into carbon char, oil and gas," Blumenthal said.
To make it economically feasible and achieve maximum operational efficiency, Blumenthal said a company would have to get 1.5 million to 3 million scrap tires, or the equivalent of those tires turned into shreds, in a year. A company could operate its own shredding plant or buy the shredded tires from a processor.
The success of such an operation is dependent, in part, upon the price of oil, said Robert A. Dye, a vice president and senior economist at PNC Financial Services Group Inc., Downtown. If oil prices continue to rise, that could expand the market for fuel oil derived from scrap tires, Dye said.
"The key is to have a viable end-use market. That's where all the previous attempts have fallen short," Blumenthal said.
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