Rolling conversation

Tyre Stewardship Australia’s second Tyre Industry Conversation opened up discussions about diversifying the markets for tyre-derived products and changing the way we view the resource recovery supply chain.

Over the past decade, a hefty number of end-of-life tyres generated in Australia were exported for reuse and energy recovery – particularly in cement kilns. According to the National Market Development Strategy for Used Tyres, almost 15 million equivalent passenger units (EPUs) were exported to countries such as South Korea, Malaysia and India in 2015-16, where they are predominately used as a tyre-derived fuel or processed into products such as crumb rubber.

Tyre Stewardship Australia (TSA) has been working diligently to increase domestic recycling. Its market development strategy shows local recycling doubled to 44,000 tonnes in 2015-16 – equating to a 10 per cent reuse and recycling rate. There are so many opportunities to process these tyres onshore for use in valuable end markets, including on our roads in asphalt, alternative fuels for local manufacturing or even crumb rubber explosives in the mining industry.

To stimulate the conversation, TSA hosted the second Tyre Industry Conversation in April to discuss with the tyre resource recovery industry and government, what can, and should be done in response to disruption to local markets from international policies and commodity price fluctuations.

Some of the discussion was predicated on the recent National Sword policy, which restricted specific waste streams with a contaminant of more than 0.5 per cent from being exported into China. While the policy has not affected tyres as significantly, it has shown how policy changes in a global marketplace can have flow-on effects that impact the entire supply chain.

Peter Taylor, Secretary General of the UK Tyre Recovery Association, was a keynote speaker at the conversation. He brought 15 years of knowledge with the UK’s tyre recovery and recycling industry. He says that everyone in the supply chain needs to come together and discuss the issues facing the industry as they appear. Peter says that it’s important for tyre recycling stakeholders to see themselves as part of an industry – not just a service. In doing so, it changes how the supply chain interacts with one another and coordinates.

“One of the major lessons that can be learned from Europe is to avoid allowing ourselves to be in different corners. In some countries, new tyre manufacturers often feel the need to lead and dictate policy, and there’s a good reason for them to step in there, but it’s not the way. There is often too much factionalism in the industry, but we should be encouraging everyone to be involved,” Peter says.

A hot button issue discussed at the conversation was the need to explore more local processing to ensure Australia is not so reliant on exports. Peter says it’s no secret that many in the industry are exporting waste tyres to countries like India. However the example in China indicates that ongoing dependence on such outlets may not be prudent or sustainable in the long term.

The National Market Development Strategy for Used Tyres report says demand for baled tyre exports to Korea and India has increased significantly.

A report on the Indian tyre industry by the University of Calicut found that Indian tyre production was expected to grow at a compounded annual growth rate of for more than 13 per cent during 2011 to 2017 – with eventual implications for its end-of-life management. India’s population is also expected to surpass China around 2024 to reach 1.5 billion in 2030, according to a 2017 report by the United Nations Department of Economic and Social Affairs.

“With India’s growing vehicle generation, it will need an efficient recovery system to handle more and more waste tyres. It’s very likely that countries receiving the tyres will begin developing their own local facilities and industries to handle their own supply,” Peter says.

“If we see India or another country decide to limit the number of waste tyres they accept, it could leave the industry suddenly trying to find a new outlet to handle it. If it happens to one country, then it will affect all the countries that had been exporting and the issue compounds itself.”

Liam O’Keefe, Market Development Manager at TSA, says the conversation was important to improve communication through all levels of the industry, from recyclers to exporters, importers and end users.

“We had a broad range of stakeholders from right across the industry engaging in mature discussion about some pretty challenging topic areas. The discussion was quite sophisticated and advanced in the issues raised and challenges posed,” Liam says.

“There are both benefits and challenges associated with the local market participating extensively with international markets. There are exposures to all waste markets, from changes in prices and policy, and we have to be aware of those to insulate appropriately so we’re not exposed to the risks of market fluctuations.”

Liam says the conversation focused on aspects of the industry that often don’t get much attention. He says it goes beyond those who are most immediately exposed to the practices of international trade themselves, including recyclers, traders and regulators. By facilitating such conversations, this helps stakeholders understand other perspectives within the resource and recovery industry, which allows collective initiatives to be undertaken.

“TSA has a strong role to play in creating a mutual understanding about what the challenges are and the collaborative efforts that can overcome them. It acts as an agent that can bring those elements together and provide a comprehensive picture of what’s happening and correct it if need be,” Liam says.

“We depend on collaboration with other agencies, including recyclers, international markets, governments and traders. Coordinating activities with them helps each other out.”

Liam says taking an Australian approach to an international issue is important when talking policy. Australia’s context is significantly different to Europe’s, America’s and Asia’s but learning from other countries provides valuable insight.

“There’s a lot we can learn from the principles and broad approaches in other countries, but we need to be aware of the Australian context. We need to learn what other organisations are doing well, but also understand that no system is perfect. We have to be open and engage with the industry and not exclude any parties to progress,” he says.

Liam says that diversifying the markets for tyre-derived products is vital to protect the industry from a potential flow-on effect.

“Diversity reduces the exposure to fluctuations in commodity prices and policies that are detrimental to the local resource recovery industry. Regulators, communities and the industry suffer when it’s not done right.”

Peter adds that the flexibility provided by a diverse market for tyre-derived products is essential to make sure there is a strong resource recovery industry.

“Tyres contain important resources, including carbon, oils, steel, gas, and tyre-derived fuel. By filling niches in both mainstream and smaller niche markets, it provides the industry with protection from a changing market.”

He says the way tyre recycling is governed is also important, praising the Australian method for its flexibility.

“Hybrid models that don’t restrict opportunities and allow for new markets to develop is important for healthy growth. Market-led methods allows for plenty of opportunities to provide for a conducive development and TSA is providing this,” Peter says.

“In some countries, like France or Spain, the mandated and rigid systems are set up with central bodies allocating resources. These models can stifle emerging business models, unduly influence markets and potentially hamper growth.

“A market-based system with some measures of oversight offers the greatest flexibility, avoiding rigid controls or a total free-for-all.”