Piles of tires ready to be recycled into new products

HUDSON – On 65 acres just north of Hudson, everyone’s trash has become Florida-based Magnum D’Or Resources Inc.’s treasure.

The company purchased a tens-of-millions-tire-strong monofill out of bankruptcy this summer. It plans to convert the existing inventory into proprietary, high-grade composite materials, employing around 100 at full capacity.

The Weld County property’s 63 pits of tires, measuring 100 feet by 30 feet and as much as 45 feet deep, have been accumulating since the 1970s, for a total of between 30 million and 55 million tires ranging from passenger to heavy equipment sizes.

Publicly traded Magnum began discussions with the previous owner/operator Tire Recycling Inc. more than a year ago.

“We’ve always been interested in having an operation in the (United) States,´ said Magnum President and CEO Joseph Glusic. The company is currently operating a much smaller facility in Canada, more of a research and development center.

Initially, the company looked at the Hudson facility as a source of raw material, and signed a letter of intent to eventually purchase the entire site in January. In April, while in due diligence, Magnum found out Tire Recycling had been in bankruptcy since 2007.

Despite having to start negotiations all over, by August the company was able to purchase the assets – including 120 acres, all the tires and equipment – from the bankruptcy trustee for $6.5 million. Already, Magnum has spent $1 million on cleanup of the site and new equipment, with another $6 million on order.

Once the equipment was in place and the title cleared, Magnum still needed necessary permits and approvals before it could start operations.

“We were all aware of what it would take to get it done,” Glusic said, adding that they’ve had about 90 percent cooperation from the multiple agencies and organizations involved.

The company received its final approvals from Weld County on Nov. 9 and was up and running with its first shredder within days.

Multiphase process

The all-electric shredder, capable of shredding up to 15 tons of tires per hour, is the first phase of Magnum’s process. It creates tire chunks that are further processed by other equipment, anticipated to be operating by February. The rubber can be ground into a fine powder, and steel and synthetic fibers removed by magnets and wind-separating equipment.

The powder itself is used to make artificial turf and playground flooring. Even the less-processed tire chunks can be sold to the landscaping market. Magnum currently has a five-year, $91.2 million contract for the production of rubber buffings and a five-year $40 million contract for the production of rubber nuggets, all based on its Canadian production.

The company plans to add even more value to the reconstituted tires. Magnum partnered with Sekhar Research Innovations of Malaysia to develop proprietary compounds with myriad applications. SRI was founded by Tan Sri Dr. B.C. Sekhar – credited with modernizing Malaysia’s natural rubber industry. The company continued innovating through Sekhar’s son Gopinath Sekhar.

In the automotive industry alone, the compunds can form bumpers, dashboards, window seals – basically anything that is molded. Glusic adds that in addition to being a recycled product, the compounds should generally be 20 percent to 40 percent cheaper than traditional rubber or plastic, especially as commodity prices rise.

The company doesn’t have any final contracts yet for the refined powder products. Bryan Brammer, corporate director of business development, explained that customers want to see that the products can be made reliably at commercial scale.

“We’ll have a cutting-edge recycling operation,” Brammer said. He admits that the shredding and chopping operations aren’t “rocket science” since most of the equipment has been around for some time and there are many competitors in the field. He said that the exciting prospect lies in the proprietary compounds and related processes that will lead to limitless end uses.

Within seven years, the company plans to have worked through its existing inventory in Hudson, and hopes to bring in 4 million to 5 million additional tires per year. The company could employ up to 100 employees at full production. Once the first line is completely up and running, there will be about 20 employees, up from the eight there now.

Not affected by subsidy cuts

The company reported an $11.3 million net loss for the quarter that ended on June 30. Now with the multiple revenue sources, Glusic feels that Magnum will be profitable without government subsidies, though no one would turn one down.

“It would be nice if we were eligible for some,” he said. “But we don’t need it to succeed.”

That’s fortunate, considering that Colorado’s small tire-recycling subsidy has been eliminated as part of the budget juggling process. The cut could impact some of the long-time recycling facilities in the state, but Magnum will not be affected.

On Nov. 2, District 65 Rep. Jerry Sonnenberg paid a visit to the facility.

“I went there to learn about the new owners and their vision about what would happen with the tires,” he said. “I’m not sure how it became such a big dumping ground.”

Sonnenberg said that he is encouraged by the prospect of the tires being cleaned up and turned into useful products. He doesn’t anticipate any big hurdles for the facility’s business plan.

“I think it could be the ultimate model of how we can deal with waste tires,” Sonnenberg said.

That’s the hope for Magnum, which is considering consulting and licensing for other facilities around the world. For now, the company is focused on getting into commercial scale production and proving to doubters that the eyesore will finally be cleaned up.

“We think we’re getting a bad rap in some regards,” Glusic said, referring to the history of the site and the company’s overall business model. “The point is we can do it, and we will do it.”

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