Presentation by:
Pyrolyx USASteven J. Renegar
Vice President of Sales
Colorado 2017 Waste Tire Market Development Conference
“Moving Markets Forward”
Pyrolyx USA / Reklaim’sEvolution in the Recovered Carbon Black Market through the
Pyrolysis Process
Discussion Points
Reklaim, Inc. Pyrolyx USA
Current North America Regarded Tire Market
Pyrolyx USA role in solving the “End of Life” situation with tires
What is Recovered Carbon Black “rCB”
Analytical & Physical Properties
ASTM Committee D36 on Recovered Carbon Black
Market conditions, Pricing, Packaging
2
Reklaim to Pyrolyx USA Reklaim’s idles the Boardman, Oregon facilities – Reason - The continuous process was not financially feasible to continue
operation
Discussions with Pyrolyx Ag (Germany) had been on going since mid 2016 (note: Pyrolyx AG had purchased CCT or Carbon Clean Tech in 2015 and was now operating it under Pyrolyx CCT. The CCT process was a batch process that was a lower cost process with excellent quality product results in the European market place
In January 2017, Pyrolyx USA a solely owned and operated joint venture was formed. The beginning of a change of ideas and concepts began.
New plant in the USA to be announced, in May 2017, plant is expected operational by the end of 2018
This plant will have a capacity of 24 million pounds or 11,000 MT annually
3
Reklaim – Boardman, OR Facilities
4
Intellectual PropertyCreates strong barrier to entry from competitors
Reklaim has submitted a comprehensive process patent, and expects issuance in 2013
• Continuous feed system allows for precise temperature control
• Process is combustion free
o No carbon released
o No impact on global warming
o No residue produced
• Process based on off-the-shelf systems
• Freedom to Operate Opinion rendered
• Worldwide patents in process
5- Proprietary technology- Based on continuous feed
Profile of Pyrolyx AG
6
Pyrolyx AG (Munich, Germany) has emerged as the dominant market leader in the recovered carbon black industry.
Background: Pyrolyx was founded in 2009 as one of the industry’s earliest producers of rCB. In March 2015, Pyrolyx acquired Carbon-Clean Tech Stegelitz (Stegelitz, Germany), another leading German-based rCB company. This deal merged the industry’s two leading rCB companies into a new global leader. Pyrolyx operates a commercial rCB plant in Stegelitz, Germany that started up in 2012 and has been in continuous operation since then. To Notch’s knowledge, Pyrolyx is the only rCB producer in the world to support continuous commercial production since plant start-up. Pyrolyx also offers post-production processing and pelletizing to greatly enhance the functionality of its rCB. The PAH values of Pyrolyx rCB are below the detection threshold (which is at least 1,000 times below those of conventional carbon black).
US joint venture: In Dec. 2016: Pyrolyx formed a joint venture with Reklaim, Inc. (Seattle, WA). Reklaim's management will run the new venture, which is called Pyrolyx USA and will produce and market rCB in the US. The venture is 81% owned by Pyrolyx.
Technology & Approvals: Pyrolyx patented recovery technology uniquely combines pyrolysis and depolymerization. Depolymerization is the process of converting a polymer into a monomer or a mixture of monomers (e.g., oil, gas, carbon black). To Notch’s knowledge, Pyrolyx is the only rCB supplier with approvals from a top 5 tire company; its rCB also has been approved or is in the final stages of the approval process for most of the world’s top ten tire companies. This is a significant competitive advantage over potential rivals because tire companies typically require that samples come from a commercial plant (i.e., the sample may not come from a pilot plant), and the approval process can take four years or more.
Hybrid rCB/CB technology: Pyrolyx also possesses a patent for a new technology that blends rCB with virgin carbon black in the furnace reactor during production to produce a hybrid rCB/CB. This technology could benefit the rCB industry because it would eliminate the distinction between rCB and virgin carbon black. Use of this patented process reduces feedstock oil consumption for virgin carbon black as well as the post-treatment process of rCB.
rCB Production Schematic
7
Abundant Raw MaterialA world drowning in tires represents large opportunity
The US Creates 300M scrap tires per year, more than 60% are either burned as dirty fuel or landfilled – the remaining 40% are recycled
8
• Pyrolyx technology uses scrap tire feedstock to profitably recycle 21% of the scrap tire problem
• Pyrolyx solution leverages abundant raw material, by creating new ways for scrap tires to be recycled into valuable products, and will prevent up to 250M of these tires from being burned or buried in landfills
The US generates 300 million scrap tires every year
Landfill or Tire Derived
Fuel60%
Recycled40%
US Scrap Tire Market Before Pyrolyx
Landfill or Tire Derived Fuel
54%
Pyrolyx21%
Recycled40%
After Pyrolyx
2015 Carbon Black Market & Beyond Demand AND pricing for carbon black is
increasing
Carbon black capacity levels have declined over the last 10 years
EPA restrictions constrain both expansion and new start–ups of carbon black facilities in the US
Increasing demand from the US based tire manufacturers; shortages are projected
Pricing is highly volatile due to the raising cost of oil in the world
Low energy costs – tire manufacturing increases in USA
Decline in boiler plate capacities in USA manufacturers
9
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2000 2005 2009 2010 2011 2012 2015
Thou
sand
Met
ric
Tons
Per
Yea
r
US Carbon Black Production vs. ConsumptionNotch 2nd Quarter 2012 Report
Consumption
Production
Shortage
rCB: Growth Drivers & Potential Headwinds
10
Growth Drivers for Recovered Carbon Black rCB offers much lower PAH and grit levels than virgin carbon black. rCB offers a cost-effective way for the carbon black and tire industries to improve their carbon footprints. The use of rCB in tires would allow the industry to ‘close the loop’ on end-of-life tires, something that has never
before been possible and could yield invaluable marketing and brand positioning advantages. Market penetration of rCB may benefit from increasing public awareness of this product as a green alternative,
potentially including pressure on government to enact supportive legislation. rCB offers an innovative and lucrative solution to the world’s growing scrap tire problem and comes at a time when
other potential options for scrap tires are encountering serious resistance: Tire Derived Fuel (in which tires are burned for fuel) due to air emissions; Mulch (for gardens or playgrounds) due to toxicity and leaching concerns; and Dumping due to reduced landfill space, increasing restrictions on solid waste, and higher costs.
Potential Headwinds for Recovered Carbon Black Tire companies are very conservative in their approach to new materials due to the critical importance of tires and
the large potential downside of product failure (costly recalls, litigation, lost reputation). New potential suppliers of rCB are caught in a classic Catch 22 for start-ups: they cannot scale up to commercial
production without customers but cannot get customers without a commercial-scale plant. This is especially true for suppliers to the tire market, since tire companies typically will not accept material from a pilot facility (i.e., test quantities must be sourced from the actual production line).
Suppliers of recovered carbon black must overcome lingering negative views of recycled carbon in the tire/carbon black industry due to the poor quality of earlier versions of carbon char. Suppliers of carbon char may continue to attempt to obfuscate the quality difference between carbon char and rCB, particularly as the market for rCBbecomes better established and prices increase.
Potential Substitution Rates for Recovered Carbon Black by Application
11
10% to 30% substitution for virgin CB
30% to 50% substitution for virgin CB
50% to 100% substitution for virgin CB
Passenger car/light truck tire tread Heavy duty conveyor belts (mining, etc.) High pressure hoses Transmission belts
Passenger car/light truck tire sidewall Passenger car/light truck tire undertread Passenger car/light truck body and belt plies Industrial/agricultural tire tread and carcass Light/moderate duty conveyor belts Rubber sheeting/geomembranes Wire/cable jacketing Gaskets & seals Rubber roofing
Passenger car/light truck tire innerliner Passenger car/light truck tire bead/apex Plastic masterbatch (for general plastic
compounds) Polyolefin films (trash bags, agricultural film) Plastic pipe Newspaper inks
Recovered carbon black can substitute for virgin carbon black at rates anywhere from 10% up to 100%. This chart shows some major applications and their potential substitution rates.
Potential Market Demand for Recovered Carbon Black
12
Recovered carbon black typically offers semi-reinforcing properties in the range of N600 to N700 series CB, and substitution rates can vary from 10% to 100%. Based on these characteristics, the tables below provide the potential market for rCB for 2020 and 2025 in the US and worldwide.
Please note that these figures refer only to the potential market and are not a forecast of projected demand. Actual market acceptance of rCB will depend on a wide confluence of factors, including the total available supply of high quality rCB, marketing efforts by rCB suppliers, crude oil prices (with higher prices supporting greater penetration), the regulatory environment (particularly around scrap tires and recycled content in vehicles), public attitudes, and adoption rates by key customers (tire companies, large producers of industrial rubber goods, masterbatchers, etc.).
The forecasts below for the potential market include all carcass grades in the N600 and N700 categories, as well as specialty markets that use conventional grades of carbon black (i.e., non-customized grades).
Grade 2020 2025Total (KT) 635 665
Carcass grades
585 610
Specialty grades
50 55
Grade 2020 2025Total (KT) 3,360 3,815
Carcass grades 3,100 3,500
Specialty grades
260 315
US Market Potential for rCB World Market Potential for rCB
Consumer Questions
What is Pyrolyx carbon black?
Where is the metal and the fiber from the tire?
How can a tire composed of as many as five carbon blacks be reprocessed to produce one carbon black material which is consistent and will perform in another rubber product?
13
• How can you assure me consistency?
• Will this material effect my compound’s performance?
• What effects does the ash content have on my compound?
• Is this material a “one to one” replacement to conventional carbon material?
What is Pyrolyx rCB Use as an additive to cut costso Partially replace high cost conventional carbon black grades including N-326, N-
550, and N-774 without negative effects
o Can achieve higher durometer and tensile allows additional oil to be added to the
compound—maintains equivalent physical properties at a significantly lower cost
Not a fillero Maintains or improves existing compounds physical properties
o Possible cure and mixing time reductions
o Easily handled and has superior dispensability properties
o The final product is the limiting factor to how much Pyrolyx rCB material can be
used in your compound
14
Significant Factors Involving Pyrolyx rCB
Ash content: 10 – 12%
#325 sieve residue: < 30ppm
Percent magnetics: - 0%
Particle size & structure: unique due to process
Physical properties: excellent, not a filler
Dispersion: excellent, pelletization process
The compression set is equivalent to the normal ASTM carbon blacks
Specific Gravity of 1.83
Consistency: Reklaim is focused to produce consistent material at valued price
Compression Set is equivalent to normal ASTM grades
rCB is not “Char” it is a semi-reinforcing carbon filler /material per defined by ASTM D3053
15
Pyrolyx rCB is a Unique Material
16
Pyrolyx rCB
Classification Properties of Carbon Black
17
Particle Size
Structure
Surface Chemistry
COOH
COOH
OH
Pyrolyx vs. Typical Pyrolysis Processes
18
Pyrolyx rCB OTHERS
Reinforcement
More LessOH
Pyrolyx rCB - Processing temperature is precisely controlled to minimize any changes in the surface activity on the carbon particles. Assuring better performance in polymer formulations.
“OTHERS” - High variable temperatures in the process is typically used in the Decomposition of tires
This results in the a change in the surface activity of the carbon changing the reinforcing properties when introduced to a polymer formulation
Composition of the Ash Content?STATEMENT: The normal ash content in Pyrolyx rCB is approximately 12% and testing via an outside certified testing laboratory shows that the ash content has no damaging effects to the physicals of the final compound. In most cases, compound performance may be enhanced due to the make-up of the ash material.
Composition Ash Content at 12%
9% Silica – this material has been found to be active and promotes reinforcement in all polymer compounds
2% Zinc Oxide – studies have shown that in some cases, curing times of the final compound have been improved. Conclusions are that these small inconsistent amounts are not significant enough to alter curing times
1% Inert Material – the remaining material is considered to be neither an advantage or disadvantage to the performance of the final compound
19
Benefits of using Pyrolyx rCBTechnical
• Quality additive for conventional blacks with no negative effects.
• Quality substitute for conventional blacks for improved performance.
Marketing• 100% post-consumer product adds “green” value to a brand.
• Qualify for end uses where recycled content is mandated, e.g., LEED certification.
Economic• Competitively priced compared to conventional blacks.
• Hedge against potential supply shortages.
20
Packaging & PricingVariety of options available
• Rail Car and Bulk Trailers• 25kg poly inclusion bags• 50lb poly inclusion bags• Customized weight inclusion bags • 2,000lb FIBC super sack bags (baffled)• No paper packaging eliminates the chance of paper contamination at
customers’ sites• All products are precision weighed: +/- 0.50lbs• Material is shipped on recycled plastic pallets• 10% to 15% below Prime Carbon Black market pricing • Long term supply agreements
21
Difficulties in Tire recycled material Start up Operations
Financial Investments are difficult to acquire before start up can occur
Promise of sales prior to building facilities Letters of intent Sample of the material must pass or exceed the expectations of prospective
customer Pricing assurances to generate the rate of return investors are trying to achieve Search partnership investments or assure of interest for investors “peace of
mind” Assurance that the new material will find a niche in the market place Can the new material fit the future market landscape
22
Keys to Success & Failures of Many Pretenders
New materials will encounter difficulty in entering the market
Products from recycled tires are completing against existing commodity products
Sales volumes are critical to success when completing against commodity materials that consist while achieving low margins for existence
Rubber and carbon black manufacturers annual production rates of over 500 million pounds
Recyclers of tire derived products cannot survive with annual production rates of 1% of the prime material being produced
Recycled tire derived products are priced lower than prime materials and the final end product determines percentage contain to be used.
23
Tire Derived Materials Growth Drivers
Lower PAH values in tire derived materials Reduced costs and improves their carbon footprint Tire manufacturer can enter into a “closed loop” system assisting with the “End
of Life” of tires situation. “Green” product are becoming more popular with the public, reduces possible
pressure from government agencies. These new recycling techniques offers new solutions in the facing pressures to
eliminate old methods of disposal of waste tires such as: Tire Derived Fuels – air emissions Mulch- toxicity and leaching concerns Dumping/ Reduced Landfill Space – restrictions on solid waste and high
costs
24
Tire Derived Material Potential Headwinds
The fear by the users of tire derived materials is that the material will jeopardize product quality resulting in costly recalls, litigation, lost company & product reputation.
It is difficult to enter the market place and obtain customers without a commercial scale plant. Pilot plants in individuals garage will not meet the needs of the prospective customers.
Overcoming lingering negative views concerning some materials by the “Fly by Night” operators over the years.
25
Why Use ASTM?
The primary purpose of the ASTM organization and committees within it are tasked with establishing testing standard (techniques & methods). These standards are used both supplier and customers to evaluate the consistency & quality of specific material.
The material from recycled tires lack these standards. Results are that they are compared directly with their replacement or active material which in most cases is not correct.
Standards are the first step in establishing common grounds for both customer specifications and supplier specifications.
Money and time has been wasted by customers in the evaluation process of material derived from recycled tires.
The “snake oil” salesman will have a harder time in a market with establish standards. Most don’t even know their product.
26
ASTM Progress
D24 Main Committee on Carbon Black approved terms via D3053 subcommittee on terminology. Recovered Carbon Black or commonly known as “rCB” and the term “Char” were defined. The process took three years that consisted of two meeting per year.
Decision to form new committee Vienna, Austria 2016
ASTM BOD approved new D36 committee on rCB, January 2017
First meeting in Brussels, Belgium in conjunction with the ETRA there were 41 attendees at the meeting, next meeting June 2017 in Toronto, Canada in conjunction with D24 and D11 meeting locations
Currently voting on testing standards that are compatibility with the commonly used prime carbon black in D24 Committee
27
Contact UsCorporate
210 South Hudson StreetSuite 310
Seattle WA 98134206 547 9557
Sales713 516 3447 (Houston)
www.pyrolyx.com
28
