SA’s tyre recycling ventures reach an impasse


SOUTH Africa's tyre recycling initiatives have run into a cul-de-sac. After the first industry-sponsored recycling programme REDISA was terminated in mid-2017 due to charges that the body was insolvent (which REDISA personnel have refuted and contested), the Department of Environmental Affairs and its Waste Management Bureau invited tenders for other plans.

Four plans were submitted and there was at first expectation that DEA/WMB would analyse these and award a contract. But there have been delays, not least because awareness of the complexity of the undertaking may have become apparent. Then DEA decided to hold public hearings in Johannesburg, Durban and Cape Town in May, possibly to make the process more transparent.

The team behind the one plan, which involved pyrolysis, did not participate in the hearings. A second plan which also relied on pyrolysis did participate but appeared to be discounted as it was inadequate for the tonnage volumes expected to be processed. Nor could it realistically be considered to be an industry waste tyre plan as it lacked nearly all the characteristics such plans must have (readGovernment Notice 1148). Both these plans had the requisite BEE ratings, a prominent and essential feature of the entire venture which any successful candidate will have to fully implement.

That left two plans in the tender process, SATRUCO and TWAMISA. The SATRUCO plan appears to fulfill some of the requirements, but the fact that one of its senior staff members is a director of the company that the DEA appointed to carry out a review of REDISA which precipitated the DEA’s action against REDISA must surely raise concerns.

The TWAMISA plan does appear to meet most of the criteria but the fact that it only deals with off-the-road (OTR) tyres (less than 10% of SA's tyre scrap) means that it too cannot address the entire problem, although it could be a solution for OTR tyre scrap.

It was confusing to see that SATRUCO presented slides that showed significant changes in budget allocations, job forecasts and Board constitution, as well as indicating that, contrary to the published plan, it would deal with OTR tyres. The TWAMISA plan too presented significant changes to its Job creation forecasts. The public was therefore being asked to comment on plans that have already changed from the versions published for comment, with no opportunity to understand the impact of the changes.

Then, to further complicate the scenario, the Waste Management Bureau took to the stage at the Cape hearing and claimed that it had out-performed REDISA (during its brief tenure) at one of the obvious tasks: that of setting up or using depots (most of which are in fact the ones established by REDISA) for post-use tyres and bulk transporting of casings. Although this was admirable, it's surprising that this situation had arisen. Surely whatever venture is endorsed should cooperate with the WMB structures, as duplication would increase both costs and confusion?


Tyre sector has effectively lost access to the funds that it is paying
The background to the entire situation is complex. On the one hand, substantial funding was originally available to REDISA but, following the complaints against that organisation, the levy paid by the local tyre manufacturers and tyre importers is now going to SARS and not to the tyre industry initiative. The DEA director-general reiterated at the hearings that the Department had no control over the flow of these funds or access to these, which is exactly what happened with the plastic bag levy after the Buyisa-e-bag venture was liquidated (the allegations of being insolvent may have been accurate in that case).

The fact that SARS and now DEA have stated regularly that these funds are not 'ring fenced' means that the tyre sector has effectively lost access to the funds that it is paying. It will be necessary for the management of any approved plan to access funds via DEA, which may prove challenging, particularly as the 2018 Budget slashed the medium-term expenditure forecast for tyre recycling from R210m – R245m in the 2017 Budget, to zero. The combined cost of the SATRUCO plan (which excluded OTR from its budget) and the OTR-only TWAMISA plan, for the first year, comes to R957m.

If that is not difficult enough, there is as yet no recognised commercially viable end-product from the tyre recycling process, meaning that participants in this sector will be under pressure to correlate and justify their input costs. If anything, the Product Testing Institute at Koega near PE may have had the best chance to progress in this area. The setting up of the PTI was one of REDISA's main achievements and the team of individuals assembled there could have succeeded in this challenge, which is akin to the Holy Grail for the tyre industry globally. The team assembled at the PTI was multi-skilled and multi-cultural as well as BEE compliant, so why the detractors chose to overlook this development remains mysterious. We hear that many of the critics believed the centre was a hoax and even that it did not exist. It does exist and this writer is of the view that the PTI had the potential to make real progress in the scrap tyre area and even to put South Africa on the global map in this respect.

The date for the completion of the tender process was 7 June.