By Julia Payne
LONDON (Reuters) - Global energy trader Vitol has signed a 10-year offtake agreement with Norwegian tyre recycling firm Wastefront for fuel produced from its first plant due to be completed in 2023, the companies said on Friday.
The fuel, created through the pyrolysis process, can be used as a feedstock in manufacturing new plastics or as fuel in motor vehicles. A rise in pyrolysis in developing countries like India and Malaysia has led to a boom in the global waste tyre trade.
The Wastefront plant will be located in Sunderland, England with a capacity to process 60,000 tonnes of waste tyres a year, which would produce about 30,000 tonnes of liquid fuel to be bought by Vitol. The agreement extends to offtake from future new plants.
Globally about 29 million tonnes of tyres end their life each year, out of which Britain accounts for about 500,000 to 600,000 tonnes.
"A lot of that goes into incineration, which is defined as recycling, but actually it produces a lot of emissions," Wastefront co-founder Christian Hvamstad told Reuters.
"We picked the UK because logistically it's quite easy to move the tires around."
The cheap energy from burned tyres is used in factories to make products like cement, bricks and paper.
Hvamstad said that about half the output from the recycling plant will be liquid fuel and around 40% will be recovered carbon black. The remaining 10% will be gas used to cover most of the plant's energy needs.
"We're trying to take small footholds in an important growing source of energy," Chris Bake, head of origination at Vitol, said. The EU aims to have renewable energy account for 14% of transport sector fuel needs by 2030.
He added that the partnership will reassure investors that Wastefront's fuel will get to the market with no extra investment.
(Reporting by Julia Payne; Editing by Cynthia Osterman)