Enviro Signs $2m Agreement for North American Tyre Recycling Plant

Scandinavian Enviro Systems has signed a conditional US$2 million agreement covering engineering and permitting work for a proposed North American tyre recycling facility capable of processing up to 50,000 tonnes of end-of-life tyres annually.

The agreement represents progress from an earlier letter of intent, but work cannot begin until the customer secures a suitable site and binding buyers for at least 75% of the plant's expected oil and recovered carbon black output.

The Swedish recycling technology developer Scandinavian Enviro Systems announced the agreement on 5 November 2026 with an unnamed international company providing transport services to the energy sector.

The proposed facility would use Enviro's pyrolysis technology to recover materials from end-of-life tyres. Its location and the identity of the customer have not been disclosed.

The contract follows a letter of intent signed on 17 March 2026 and moves the project into a conditional development phase, ahead of any decision to invest in construction.

Under the agreement, Enviro would receive $500,000 for preparing documentation required for environmental, planning and fire safety permits. A further $1.5 million would cover the plant's initial engineering and design, including technical drawings, equipment specifications and calculations.

The company would receive an initial $450,000 once the customer authorises the development assignment, with subsequent payments linked to delivery milestones.

Product Sales Agreements Required Before Work Begins

A central condition is that the customer must secure binding purchase agreements covering at least 75% of the expected production of each of the facility's two principal recovered products: pyrolysis oil and carbon black.

The customer must also identify and secure a suitable site before authorising Enviro to begin engineering work.

These conditions place the commercial market for recovered materials at the centre of the project's development.

Recovered carbon black can potentially replace a proportion of virgin carbon black in rubber manufacturing, including tyre production, while tyre-derived pyrolysis oil can be used as an industrial feedstock.

For recycling operators, the requirement demonstrates the importance of establishing demand for recovered products before committing further resources to facility development. It does not, however, establish that the proposed plant's commercial viability has been demonstrated.

Engineering Programme Could Take Seven Months

Once the customer decides to proceed, Enviro expects the engineering assignment to take approximately seven months.

Permit application documentation is scheduled for completion after around five months, followed by further engineering deliverables. Enviro would also provide defined technical support during the subsequent permitting process.

The customer has until 31 December 2027 to authorise the assignment. If it declines to proceed or fails to make a decision by that deadline, the agreement terminates.

Importantly, the agreement does not grant the customer the right to construct or operate a facility using Enviro's technology. A separate technology licence would be required, alongside any necessary regulatory approvals and subsequent investment decision.

Enviro would be entitled to payment for contracted services performed even if the plant ultimately failed to secure permits or proceed to construction.

Agreement Comes During Enviro's Financial Reorganisation

The North American announcement comes as Enviro continues a corporate reorganisation process in Sweden.

Its third-quarter results, published on 29 October, recorded a net loss of SEK 37.3 million and revenue of SEK 0.02 million.

On 5 November, Enviro also announced a second SEK 5 million drawdown under its convertible financing agreement with Nordic Restructuring and Growth Capital 1, following a waiver of certain financing conditions.

The North American contract offers a potential source of development-service revenue, although payments remain conditional on the customer proceeding.

The next significant milestone will be whether the customer can secure the necessary site and product offtake agreements, allowing engineering work to commence and the project to progress towards a potential technology licensing arrangement.

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Tags: Scandinavian Enviro Systems, Enviro, tyre pyrolysis, North America, tyre recycling, end-of-life tyres, recovered carbon black, pyrolysis oil, recycling investment, offtake agreements

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