A Business Opportunity Study on Recovery of Fuel Oil, Carbon Black and Steel from Used Tyres

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Addis Ababa University


The purpose and scope of this study is to introduce used tyre pyrolysis business and provide general information on the project. Tyre pyrolysis is a process carried out in the absence of oxygen to recover fuel oil, gases, carbon char and steel from used tyres. The study is based on data gathered from pertinent secondary and primary sources, and certain assumptions. In the study, it is found that about 40,000 tons of scrap tyres are generated annually in Ethiopia currently, out of which about 6,000 tons per year are estimated to be available for pyrolysis project. The envisaged project will have adequate market for its products. A plant with 12 tons per day capacity with technology from China is selected. The best location for the project is in the outskirts of Addis Ababa or Oromia towns around Addis. The total investment cost of the project is estimated at Birr 12.6 million. The financial analysis shows that the project is viable in all measures of profitability analysis: The simple rate of return on total investment at full capacity operation is 52%; the payback period is 3.6 years including the construction period; the net present value (NPV) over the total investment, calculated at 12.5% discount rate, is positive (i.e., Birr 19,447,413); the internal rate of return (IRR) over the total investment is 43%; and annual cash surplus starts in the second year and continues to grow. The result of sensitivity analysis shows that the project is primarily sensitive to fuel oil sales price, and also to scrap tyre acquisition cost on secondary level. The feasibility of the project becomes marginal if the steel has no sales, and the project ceases to be feasible if both carbon black pellet and steel do not have market. This is in conformity with the findings in the literature. The project possesses wide range of benefits such as generation of social surplus and employment, import substitution and contribution to the transfer of technology. In addition, the project greatly contributes to the environmental protection effort by cleaning waste tyres, reducing the health and fire hazards and avoiding release of chemicals that harm the environment by open burning. Hence, the project is worth implementing, and it is recommended that interested parties should prepare a detailed feasibility study and start the project soon to get the first mover advantages. Key Words: Scrap Tyre Management, Scrap Tyre Pyrolysis, Project Feasibility Study, Tyre Pyrolysis Oil, Carbon Black/Char.



Scrap Tyre Management, Scrap Tyre Pyrolysis, Project Feasibility Study, Tyre Pyrolysis Oil, Carbon Black/Char