Running a business by selling scrap tires or collecting the scrap tires and shredding them and selling them to tyre recyclers is the main concept of scrap tyre recycling business.
Waste tyres are widely abundant and cheap material. Instead of discarding them, they can be put to better use such as making rubber mats, brake pads and sports utilities, etc., In addition, they have high demand in the shipping, logistics, and construction industries.
Today, the scrap tyres business is one of the popular recycling business ideas. If one can explore the full potential of this business, they can turn this into a million-dollar business. Not only you are making money, but you are also contributing to sustainable environment
Though tire recycling seems a simple business on paper, it takes lot of investment and machinery to make sustainable profits in this business. In addition, you need an ongoing business from both parties’ i.e., customers and suppliers to keep up with the business.
Quick Facts About Tyre Recycling Industry
- On average, 1 billion tires are wasted every year and only 100 million tires are recycled. Most of them end up in landfills
- 5 Lakh tons of crumb rubber modified bitumen (CRMB) is used in road construction every year in India
- Advanced technology such as Pyrolysis is rapidly adopted by several scrap recyclers to help in converting scrap tyres into carbon, steel, oil, and gas
- Tire-derived fuel (TDF), which is extracted from scrap tyres has high demand in Cement and paper industry
Steps involved in Starting a Tyre recycling Business
Here are the steps involved in setting up a tyre recycling plant
Step 1: Look for Customers and Suppliers
The most important step in tyre recycling business starts with finding the suppliers and customers. These two are essential to run this business. So before deciding to start this business, you need to research and get the data of both parties.
For example, customers from the shipping industry have a high demand for scrap tires as they are used as buffers between boat/ferries and dock. Next, the construction industry also has good demand for shredded tyre material. In this way, you need to know which customers have the requirement for scrap tyres
In the same way, you also need to know where you can get or who can supply scrap tyres. Initially, you may get scrap tires from garages, tire dealers or vehicle repair shops or junk yards. However, there is no guarantee of constant supply.
So, to make sure your business doesn’t get impacted, you need to tie up with multiple suppliers, who can supply waste tires every day.
Step 2: Resources required to Setup a Tyre recycling plant
In order to setup a tyre recycling plant; you need the following resources
The area required to setup a tyre recycling plant depends on two things.
- Do you just collect the scrap tires?
- Do you also process the scrap tyres such as shredding?
If you just collect the scrap tyres then, an area of about 250 square yards is more than sufficient.
However, if you are also processing the scrap tyres such as cleaning and shredding, then you may require about 1 acre of land. This is because, you need space for dumping tyres and also to setup the machinery that cleans, crushes and shreds the scrap tires
You need to ensure your recycling center is located is an ideal place where the customers as well as suppliers can access it.
Most tyre recycling centers are located on the outskirts as the land rates are cheap to set up a recycling plant.
When deciding where to setup your recycling center consider the following things
- Is your location easily accessible by road
- Is it accessible for the suppliers to drive into your plant?
- How accessible is it for you to reach customers or go and collect scrap tires at other locations?
- Is there enough power supply and water supply? Please note, that tyre recycling machinery require good amount of power and water supply
- Does the location have appropriate permissions?
Equipment and Machinery
In the process of establishing a tyre recycling center you need some equipment and this depends upon – How you are operating the business.
If you are just a scrap tyre collector, then you need a pick-up truck and then an industrial-grade weighing machine. This costs around $800 to $1000
Next, if you are planning to recycle scrap tyres and would like to extract materials such as rubber strips, rubber chips, rubber blocks, rubber powder or steel wires, etc., then you need a complete scrap tyre recycling plant. Which requires high capital and workforce.
On average, a tyre recycling plant cost ranges from $50,000 USD to $ 500,000 USD the price depends upon the features of the machinery, production capacity, and output material
Here is the list of equipment used in tire shredding process
- Tire circle cutter
- Strip cutter
- Slice cutter
- Rubber crusher
- Fiber separator
- Magnetic separator
In addition to these, you need some basic things such as a truck for transportation and some basic hardware tools
For a scrap tyre collection center you need a minimum of 2 workers. But if you are also processing recycled tyres, then you need a larger workforce of about 10 workers.
Basically, as a scrap tyre collection center, you just deal with loading, unloading, and packing the waste tires – so, you do not require too many workers.
On the other hand, if you are running a tyre recycling plant where the shredding process takes place, you need more workers to load and unload, operate and monitor the machinery, etc.,
Registrations and Licenses
Just like any other business, you need some common things to start a business such as business registration, EIN, business bank account, and insurance
In addition to the above, here are some common licenses or permits a tyre recycling center is expected to have
- Land permit
- EPA Permit (Environmental Protection Agency)
- Waste Management facility permit
- Fire protection permit
In addition, there might be different recycling laws for each state. You can approach your local state or country office and get those details
Step 3: Business Plan to Run the Tyre Recycling Center
Once you gathered the market data of potential customers and suppliers, machinery requirement etc., You need a business plan to run your recycling center
Just as mentioned above, there are two ways of doing this business 1) collecting the scrap tyres and selling them to recyclers or other customers, 2) setting up a tyre recycling center where you recycle the scrap tyres turning them into materials that are required for other industries
The first option is relatively economical and doesn’t need too much of investment
Whereas, if you choose to establish a small-scale tyre recycling center then you may need to apply for business loans or look for a financer.
In the process of preparing a business plan, you need to determine the possibilities of running a tyre recycling plant through which you will get an idea of capital requirement, resources, operational costs, and marketing
Step 4: Ways of Doing Business
If you are thinking to setup a complete scrap tyre recycling center then here is a typical way of doing the business
Collection of Tires – This is the first stage, You need to source the tyres from different waste tyre collection centers, which can be either from a junk yard or recycling plant, or waste tire suppliers. At this stage you need to check what kind of tires you are looking for eg:- Heavy truck tires, Automobile tires or Bicycle tires etc.,
Recycling the waste tyres into useful materials – Once the waste tires are collected they will undergo a series of recycling processes and the following by products are produced
- Rubber blocks – Used in the construction and Transportation industry
- Shredded rubber chips – Used in kid’s play area as a substitute for sand
- TDS – Tyre derived fuel is a key fuel for paper mills and cement factory
- Rubber powder(Crumb rubber) – Used in basketball and shuttle courts surface
- Rubber pieces – Used in making gym equipment and other sports utilities
- Preparing rubber footwear
So, by now you got an idea what are the different uses of recycled tyres and which industries require the byproducts of waste tyre recycling.
Step 5: Profitability in Tyre Recycling Business
The ROI in tyre recycling depends on how you operate the business. For example, if you are a scrap tire collector, you sell the tires directly to the recyclers. In this case, for example, if you charge $1 per collection of each tyre and $0.5 for storing and transporting then, by shipping 1 tonn of whole waste tyres you would make $1,500.
On other hand, if you can retread the old tyres and sell them, then you can make a little extra profit from each tyre.
Whereas, tire recycling business profit widely varies if you are completely processing the old tyres such as shredding them into crumb rubber or processing them into small pieces and selling them to endusers.
In this model, you have more opportunities to earn profits because you are processing the tyres and also adding extra value to the byproduct. But the initial investment for the machinery is very high in this model and it takes time to earn the ROI.
Scrap Tyre industry has a lot of potential benefits. Nations like the USA, UK, and Europe have some of the most advanced technology and better regulations in place. However, the opportunity to turn waste tyres into profitable and better products is still unexplored. Especially, in developing nations like India, China, Brazil, and Middle Eastern countries this needs to be implemented at a greater scale considering the population.
If this market is utilized properly, it can create several jobs and also protect the environment at a greater level.