A Business Opportunity Study on Recovery of Fuel Oil, Carbon Black and Steel from Used Tyres
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Date
2014-05
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Addis Ababa University
Abstract
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.
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Keywords
Scrap Tyre Management, Scrap Tyre Pyrolysis, Project Feasibility Study, Tyre Pyrolysis Oil, Carbon Black/Char