Posted by Paul Moore on October 5, 2022
In September, Kal Tire’s Mining Tire Group, the world’s leading mining tire sourcing and management partner, and Mitsui & Co, a global business group focused on innovation and sustainability, announced the formation of a landmark joint venture to advance mining tire recycling solutions for mining regions around the world. Paul Moore sat down with Dan Allan, senior vice president of Kal Tire’s mining tire group, to get more information about the new partnership.
Q What value does Mitsui bring to Kal Tire in your mining tire recycling plans and roadmap?
Mitsui has been an active investor in the mining space for many years. They are very familiar with mining companies with major investments and partnerships with Tier 1 miners at some of the biggest mines in the world. This will help us better understand how these mining companies approach end-of-life tire management and potential recycling solutions. We know tire recycling is getting a lot of attention these days, and there are a lot of questions that need to be answered. Our collaboration with Mitsui will provide much more insight into the circular economy and the sustainability ambitions of top miners.
The signing of the Kal Tire-Mitsui JV
Q Mitsui is also one of the largest trading houses in the world. Has this been a factor in the collaboration and will they be actively involved in the refining and marketing of mining tire recycling products, including carbon black?
It’s not part of the collaborative plan right now, but it’s certainly a possibility. This partnership came about because Mitsui wanted to see how to better participate in sustainable mining, the circular economy and the associated value chain in a meaningful way – and not just as an investor. This allows them to get directly involved in the mining tire recycling industry at an early stage, and with an operating partner who has already developed and brought an industrial-scale thermal conversion facility close to the commercialization stage. However, as you said, they also have expertise in chemical engineering and materials technology, which will help us when looking to build relationships in downstream markets for tire thermal conversion products.
Q How did the partnership come about in the first place?
We started talking with Mitsui about mining tire durability over five years ago and it became clear that tire recycling was where there really could be value for both parties – and that both parties really had something to contribute to a possible joint venture. For us, as Kal Tire, it was also important that the spirit and values of their organization fit well with our own, because a joint venture on something like this was a very big step for us – and we really felt comfortable with Mitsui.
The Antofagasta facility is included in the joint venture
Q You have spent a number of years advancing the Antofagasta recycling facility – will this and all other mining tire recycling plants now be jointly owned by the joint venture?
The joint venture we have formed is specifically related to the recycling of mining tires on an international scale. Wherever we have Kal Tire operations or aspirations, the mining tire recycling joint venture will include those geographies. The idea is that each plant and site we look at has the potential to have its own structure depending on specific market contexts, and the JV will have the flexibility to adapt this activity to the needs of local markets. In some cases the joint venture will own the factories, but in other cases there may be other approaches. For example, if we decided to have a separate mining tire recycling plant serving a mining operation, you could have a joint venture between the Mitsui-Kal Tire joint venture and the mining customer. And we also include our existing Antofagasta plant in the JV.
The recycling of Q Mining tires is already legislated in Chile and it looks like other countries like Colombia, Peru and Canada will follow. Will the joint venture make it easier to manage the expansion of this part of your business?
Mitsui is a huge company with a lot of available capital; and if the demand for mining tire recycling grows to the level we and Mitsui anticipate, their partnership in the JV will clearly be a major component in our ability to initially fund any significant expansion of the existing plant and other plants in key mining regions.
Q Where are we going now that the JV has been announced? What are the next steps?
An international company has been created and will operate under the name Kal Tire Recycling. It is it that will determine the priority markets for mining tire recycling, the constitution of financing for the different regions, and all the operating companies of the recycling plants will report to this holding company. We are transferring the assets of the Antofagasta factory to this structure which will serve as a model for other factories as they evolve. And as noted, we have the option to include mining customers or other local stakeholders and investors in the ownership structures of the operating companies for these future plants, with the holding company Kal Tire-Mitsui retaining the majority.
Q What has been the reaction from your mining customers since the announcement of the joint venture?
We were looking for a partner who understood what the future mining tire recycling market might look like – how to take advantage of it and how to supply and develop downstream markets for thermal conversion products. I think most miners thought we would go for a partnership, but some expected it to be with one of the major tire companies. We work closely with manufacturers in our tire sourcing and management activities, and they will be an integral part of the downstream tire recycling mining business in terms of the potential use of carbon black. But for a JV partner, we felt that Mitsui was the optimal fit given its presence already in the mining sector and the capabilities it has in various engineering spaces. We see tire manufacturers as important players in this recycling space. However, solutions to end-of-life tire challenges must be “brand independent”. This is an industry issue, not a specific manufacturer.