Australia's biggest tyre recycling operation is to be created by the Envirotyre Group, which plans to build processing plants in all states to recycle a vast amount of the 17 million used tyres discarded each year.
Envirotyre Group is calling for interested investors to obtain a copy of its prospectus.
Investors are being offered forecast average annual returns of 20.2%, and the Australian Taxation Office (ATO) has delivered Product Rulings that the investments are up to 100% deductible.
An amount of $61 million is being sought from investors to build plants consecutively in New South Wales, Victoria and Queensland, with smaller feeder plants being installed in other states.
The Envirotyre plants will use advanced, proven technology that is capable of converting old tyres into high quality crumb rubber for value-added uses such as road surfacing, sports matting, footwear, mouldable rubber products and automotive components.
At present there is no major player in the Australian tyre recycling industry, which is characterised by low-technology or smaller operators unable to benefit from the economies of scale of a national operation.
Tyre retailers presently charge a disposal or recycling levy when new tyres are purchased.
The fee varies on the location and is, in theory, used to pay for the proper disposal of the used tyre. Disposal of used tyres has always been problematic, with many dumped illegally in state forests and national parks.
"Most used tyres end up being dumped in landfill, legal or otherwise, because collection methods are unsystematic, processing technology is inadequate and markets for processed product are not properly exploited," Envirotyre Group managing director Gavin Ridley says.
The Envirotyre Group has in place a sales and supply agreement with a marketing company that will purchase the entire rubber crumb produced by the plants.
The very high reliability and cost-efficiency of the plants means a small, relatively unskilled workforce can operate them with minimum handling.
Unlike many alternative recycling methods, the Envirotyre technique requires only one pass of the tyre through the processing machine to remove the steel and fibre components from the casing, and one further pass to convert the tyre into rubber crumb of the desired size.
The Envirotyre Group is forecast to be cash flow positive from early in the venture, as the group will have a significant revenue stream from the fees for collecting used tyres.
The contract to purchase the manufactured product will also provide an assured income.