STOCKHOLM, Sweden — Michelin Group and Scandinavian Enviro Systems A.B. (Enviro) are planning to open a tire-recycling facility in Chile as part of their recently completed strategic partnership agreement.
The facility in Chile, to be operated by 90/10 Michelin/Enviro joint venture, will open with a capacity to recycle 30,000 metric tons of OTR tires a year, the companies said.
The partners did not state where in Chile the plant will be located nor elaborate on why Chile was selected as the site for their first project. Chile is considered the No. 1 producer of copper and No. 2 producer of Lithium in the world, according to various sources.
Michelin and Enviro have been working toward this announcement since April 2020, when Michelin disclosed it planned to invest in the Swedish tire pyrolysis company as part of a move to improve its sustainability portfolio and to help scale up Enviro's "innovative" recycling technology.
The two sides signed a letter of intent then regarding a long-term partnership, which calls for Michelin to acquire 20% of Scandinavian Enviro's shares, thus becoming the company's largest shareholder.
The terms of the Michelin/Enviro deal are still subject to approval by Enviro shareholders at a soon-to-be-arranged extraordinary general meeting.
The agreement covering the plant in Chile includes provisions for Michelin to pay for using Enviro's patented technology and services at the JV facility.
The Swedish partner will pay $3 million into the JV and receive royalty payments under a license deal, allowing Michelin to set up its own recycling plants based on Enviro's technology.
Under the license agreement through 2035, Michelin will pay Enviro a fixed amount per plant as well as royalties based on a percentage of the plants' sales.
Enviro will also receive around $1.6 million in payment for design, engineering and project services in connection with the establishment of the plant in Chile.
"Through the partnership with Michelin, we will achieve our first full-scale recycling plant, which is decisive for our ability to scale up and commercialize our technology," Enviro Chairman Alf Blomqvist said.
"The partnership with a leading tire manufacturer also gives us unsurpassed opportunities to improve our recovered carbon black and pyrolysis oil, which will naturally further strengthen our position on the market," he added
In particular, he said the oil recovered from tires "is attracting growing interest from the oil and chemicals sector, which regards it as crucial in managing a transition to a more circular economy."