1. Assessment of the Markets for the Fiber and Steel Produced From Recycling Waste Tires CalRecovery, Inc. in association with Ralph Hoag Consulting, CalRecovery Europe, and ACCI California Integrated Waste Management Board July 2003

2. Key Tasks of Study Literature Search Industry Survey Supply and Demand Analysis Identification of Barriers Cost-Benefit Analysis

3. Overview of Results Steel: medium-value commodity if high-quality recovery of high-quality steel is likely achievable some steel scrap markets available in California Fiber: low-value commodity as typically produced markets limited (localized niches) or non- existent, nationwide and in California

4. Status: Percentage of Processors Recycling Tire-Derived Steel and Fiber a) Percentage of respondents that reported recycling rather than disposing of tire-derived steel or fiber.

5. Potential Diversion in 2007 from Waste Tire Processing in California

6. Tire-Derived Steel -- Markets View of Commercial Status Largest potential use by far is as scrap for steel and iron manufacture But 61% said that even though steel scrap is the largest use, market is limited or non-existent for tire-derived steel Problems are rubber contamination and chemical composition of tire steel

7. Recovered Steel Properties 60% of processors recover steel with purities of 90% or more About 30% of processors recover steel with greater than 99% purity Recovery of high-quality steel appears technically achievable Clean steel yields sales for processors if markets are within economic reach

8. Steel Quality and Marketability According to Commercial Sellers

9. Tire-Derived Fiber -- Processor View of Commercial Status As fuel (cement kilns), 21% of end use responses In carpet underlay In carpet blends As filler for various applications No uses (24% of responses) (There is no processing for recovery or use of single types of fiber (e.g., polyester fiber))

10. Tire-Derived Fiber -- Marketing Problems Mixed composition of resins Fibers too short and crimped for many potential applications Lack of material property data Lack of R&D to develop/evaluate potential uses Cost and level of performance of fiber cleaning systems are not well documented in literature

11. Conclusions -- Steel Steel has to be clean and packaged correctly for uses – several hundred thousand dollars of capital investment is typically required Data on quality of clean steel is lacking, so processors are exposed to technical risk and, therefore, financial risk New industry (ISRI) tire-derived steel specifications may stimulate more recycling of tire-derived steel

12. Recommendations -- Steel Capital equipment funding assistance would serve to bridge gap between procurement and installation of equipment, and revenue generation as a consequence of steel sales Samples of clean recovered steel and communication between processors and potential markets would foster market development – this type of technology transfer could be facilitated by the Board

13. Conclusions -- Fiber Mixed resin composition and physical characteristics limit uses – TDF-fiber, while not materials recycling, represents one use that can tolerate these characteristics

14. Recommendations -- Fiber Lack of data on fiber characteristics and lack of applicable/adequate industry standards limit market development, especially any potential high-value uses – Board could assist in acquiring samples of clean fiber and facilitate producer/user communication and market development

15. Recommendations -- Fiber (cont.) Waste fiber dealers and textile manufacturers are reservoirs of knowledge – Board assistance to facilitate processor/market communications may yield some heretofore unidentified uses or potential uses

16. Recommendations -- Steel and Fiber Communications between buyers and sellers in tire-derived by-product marketplace need to be improved through communication/education Processors need marketing experience, and low margins limit their capacity to pursue markets for by-products – technology transfer and market development assistance by Board would help resolve both of these hindrances

17. Recommendations -- Steel and Fiber (cont.) Modest level of incentives or program efforts could probably stimulate substantial recycling of tire-derived steel Increased recycling of tire-derived fiber would likely require long-term commitment and multi- faceted approach due to number and types of barriers involved