Where the rubber hits the road …
I recently got to work with a company from an industry that rarely attracts the spotlight, but which is much bigger than I could first imagine - and growing rapidly. Circular Rubber Technologies is a “waste to value” company, and last week I visited their first commercial plant under construction in Red Deer. I find their business model highly interesting, thus going into more detail than usual in this blog post.
Circular Rubber converts old mining truck tires into “reclaim”, a devulcanized product that can substitute natural rubber in applications from tires to shoe soles to hockey pucks. The global rubber market is sizeable - USD 45bln p.a. for virgin rubber in tire manufacturing alone, with large demand for sustainable alternatives. Customer benefits are lower cost, more reliable logistics, and significant environmental benefits. At the same time, this solves a headache for mine operators, as tire recycling capacity is insufficient, leading to abandonment liabilities from tires stored on mine sites.
The process is thermo-mechanical devulcanization via extruder technology. Vulcanization is the process of hardening virgin rubber, typically by adding sulphur, which creates cross-links among rubber polymer chains. Breaking these bonds, devulcanization, traditionally has involved chemical processes. Circular Rubber’s technology instead relies on chemical-free mechanical treatment in an extruder, which basically uses gears to generate large pressure gradients on the rubber, breaking the sulphur-bonds. The input material makes a big difference - mining truck tires contain more natural rubber than e.g. passenger car tires, leading to a higher quality reclaim product. And the reclaim also contains another valuable component, “carbon black”. In a nutshell, Circular Rubber converts a waste problem into a valuable raw material, thus “waste to value”. Logistics costs and risks are reduced as the entire material flows - from mine site to shredding company to CRT to offtaker - remain within Canada, whereas virgin natural rubber is mostly sourced from Southeast-Asia.
Circular Rubber has already produced several tons of reclaim at a contract operator’s facility in Germany. But given high safety requirements especially for tires, substituting virgin rubber with reclaimed material requires thorough lab testing and facility audits to ensure consistent high quality. This creates an entry barrier but also a good “moat” once the business is up and running. Successful completion and commissioning of the Red Deer commercial plant is thus crucially important.
Circular Rubber’s CEO Maartje van der Sande, a former Shell-colleague, in front of CRT’s first commercial plant.
Construction is well under way, with facility start-up anticipated by mid-2024. The plant contains an on-site lab, which will test product quality from multiple points along the manufacturing process as required by customers. Two aspects impressed me in particular - the attention to detail, and the high degree of scalability. The company has made extensive use of modeling and simulation software to optimize the plant and work flows in order to de-risk operations ahead of start-up, and invested proactively into health and safety systems. Initial operations will involve a single line with a single shift, and production can reach up to 15,000 tonnes per year with multiple shifts. The facility may accommodate an additional line as demand scales.
My main takeaway - we can solve many challenges with a combination of creative technology and focused implementation, generating substantial value along the way. Not easy, but worth it.