GCI GROUP

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BUSINESS PLAN
Car tire recycling

GCI GROUP
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We bring to your attention a draft business plan for creating a production facility for
processing used car tires and other waste into crumb rubber based on an automatic line
of tire recycling equipment.

The draft business plan is based on the current situation in the market for processing
tires into crumb rubber in the regions of Romania , price and tariff indicators are given
taking into account the economic characteristics of our country.

Summary of the tire crumb recycling project

Project name.

Production (enterprise) for processing used car tires into high-quality and sought-after
crumb rubber.

Technological solution.

Automatic line for recycling used tires .

Author of the project.

GCI GROUP

General investment needs.

up to 500,000 euros (line cost and production deployment costs).

Construction period (from the moment of signing the purchase and sale agreement of
the Line until commissioning) is 3 - 5 months.

Products that are the subject of the project.

Rubber crumb 3 fractions: up to 1 mm, 2-3 mm, 4-5 mm

Metal cord

Textile cord

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Main consumers of manufactured products.

Large consumers include: construction companies; manufacturers of sports surfaces;

manufacturers of road surfaces based on modifiers using crumb rubber; manufacturers
of rubber products, companies serving the oil industry and many others.

A separate area of building a sales system is participation in the placement of State and
other orders for the purchase of crumb rubber for the construction of sports facilities,
the latest generation of road surfaces and others.

Benefits of a tire recycling and recycling project

1. As a technological solution, it is proposed to use an automatic installation for

recycling used tires and which has the following advantages: low energy consumption,
recycling of tires of any diameter, multi-stage screening of textile and metal cord, high
quality products, maintainability, and a small number of maintenance personnel.

2. Standardized production product. Production of crumb rubber that meets high quality
requirements.

3. Guaranteed sales. The GCI GROUP company promotes the sale of all manufactured
products throughout the EU .

Permitting documentation.

A company providing tire recycling services must have a license to handle hazardous
waste.

Description of the waste tire recycling project

The purpose of the project is to produce crumb rubber.

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Creation of production for the processing of used car tires using technological
equipment for processing shea”; production of a final product that is in demand on the
market and ready for use in various areas of production of goods and services.

Relevance of the project.

The problem of recycling hazardous waste is very acute in Romania and EU countries .
Every year, millions of tons of waste of various hazard classes accumulate in landfills
or in places not intended for storage and disposal. In particular, the number of cars and
the road transportation segment is growing by tens of percent every year.

The total volume of waste tires in Romania and amounts to more than 2 million tons.
The insufficient number of enterprises providing tire recycling services and the lack of
a centralized system for collecting and processing used tires in many regions leads to
the fact that more than 50,000 tons of used tires are generated annually in each region.

Only a portion of the tires are placed in special landfills, specially equipped for long-
term tire storage. At the same time, even organized storage of a large number of tires is
a constant source of environmental pollution and an increased likelihood of uncontrolled
fire. Tires are extremely flammable and in the event of a fire, the combustion
temperature of the tires is equal to the combustion temperature of coal, it is quite
difficult to extinguish them, and when burned, harmful combustion products, including
carcinogens, are released into the air. Tires are practically not subject to biological
decomposition; when stored or buried, they serve as an ideal breeding ground for
rodents and blood-sucking insects, carriers of infectious diseases. In addition, there is
the problem of land acquisition for tire storage. Tire recycling is the best solution to the
land problem.

Since 2006, the disposal of car tires and their burning have been prohibited in EU
countries. At the same time, tire recycling is a priority method of tire disposal. Used
tires are a dangerous type of waste of hazard class 4 and are subject to mandatory
disposal. The EU has a supervisory system for waste management and the disposal of
tires on the balance sheet of enterprises. Enterprises have the right to hand over tires for
recycling only to special plants that have a license or the right to handle hazardous types
of waste, providing documents confirming the fact of handing over the tires, which is
necessary for submitting environmental reporting and calculating “Fees for negative
impact on the environment.”

At the same time, worn-out car tires, with the right approach to their processing,
preserving the chemical properties of rubber and rubber, are an excellent raw material
for obtaining a secondary product: crumb rubber, metal and textile cord.

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About 90% of tires provide a reserve of raw materials for recycling, which, given the
emerging problem of irreplaceability of material resources, has enormous economic
significance and potential.

Thus, the relevance of creating a production facility for recycling used tires consists of
two components that underlie this project: solving an environmental problem: recycling
hazardous waste, preserving natural resources, reducing areas allocated for landfills.

Production of a product that is in demand on the market, suitable for use in various
production areas.

Creation of new jobs.

Application area.

The line for recycling used car tires is used to solve the problem of recycling used car
tires in cities and regions with a population of more than 50 thousand people.

Creation of a tire recycling plant - is an environmentally friendly, waste-free production:

during the processing process there are no emissions into the atmosphere, and the use
of water resources for cooling is not required. The wheel is completely recycled, without
any residue. All three processed products are subject to further use and sale.

Raw materials and organization of the raw material collection system.

Today in Romania More than 2 million tons of waste are generated annually in the form
of used car tires. The recycling percentage of the total volume of tires is, according to
various estimates, 7-10%. While the growth of road transport is 5-7% annually.
Therefore, based on statistical data, the availability of raw materials for processing and
production of crumb rubber will not decrease in the next 10-15 years, but will only
increase.

The raw materials for the production of crumb rubber are worn-out car tires with metal
and textile cord, of any diameter, and waste rubber products.

One of the main factors in organizing a profitable tire processing plant is the availability
and accessibility of raw materials. The main suppliers are large and medium-sized
enterprises that include motor transport on their balance sheets: carrier companies, auto
enterprises, industrial production, vehicle fleets of government agencies and
departments, tire centers, solid waste landfills. Therefore, when building a tire collection
system, the factor of transport accessibility to enterprises should be taken into account.

Acceptance of tires occurs on the basis of contracts for acceptance of tires for disposal
or recycling. Acceptance of tires for recycling is carried out for a fee per ton of tires,
depending on the rubber, availability, region, and so on.

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Products.

Products from the processing of car tires using a processing line are:

• metal cord;

• textile cord;

• crumb rubber of different fractions: up to 1 mm, 1-2 mm, 2-5 mm.

Rubber crumb

Crumb rubber is the main product of car tire processing. Due to the fact that car tires
are subject to long-term colossal loads during operation, high-quality components
(natural, synthetic rubbers, softening oils, fillers, etc.) in conjunction with the latest
technologies are used in the production of new tires. Tire rubber is practically the
strongest and most durable of all types of rubber used, and has many other important
qualities (elasticity; resistance to acids and alkalis; bending strength, tensile strength,
abrasion, etc.).

When tires are mechanically processed into crumbs, the physical and chemical
composition of the rubber remains virtually unchanged. Due to the fact that crumb is a
product of tire processing (recycling), the market price for it is 3-4 times lower than for
primary rubber raw materials. Therefore, crumb is an inexpensive, high-quality tire
recycling product.

Crumb rubber obtained as a result of mechanical processing of worn-out tires has

numerous and promising areas of further practical application, which, with the effective
organization of marketing support and a sales system, will ensure its fast and sustainable
implementation.

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Crumb rubber has a wide range of applications

1. Production of safety rubber tiles. Rubber tiles, made from the most wear-resistant
rubber raw materials, have wear-resistant, durable, shock-absorbing, shock-absorbing
and orthopedic properties. The specific gravity of crumb rubber in the production of
rubber tiles and paving stones is more than 80%. Currently, there are more than 150
mini-factories for the production of rubber tiles. Consequently, the demand for crumb
rubber shows an increase in the required volumes every month.

2. Flooring for sports fields and facilities. Coverings made of crumb rubber and polymer
binders for sports fields, basketball, volleyball, badminton courts. Anti-slip and safe
entry surfaces. Crumb rubber is also used in these types of coatings. Additives of crumb
rubber obtained from tire processing make the coatings more wear-resistant and
practical, they have better ductility, and are durable.

3. Fillers for sports equipment. Crumb rubber is used as a filler for bags and punching
bags.

4. Football fields with artificial grass are covered with crumb rubber, 1.0 - 2.5 mm.

5. Covering building material. This is a roofing material in the form of a combination

of bitumen and polyurethane; the top is filled with a composition of thiokol with the
addition of fine purified rubber crumbs. To carry out the entire range of coating works
on the roofs of residential and industrial buildings, it is recommended to use various
materials with the addition of crumb rubber: slopes (up to 90% crumb rubber), sealing
seams (up to 50% crumb rubber), sealing joints (up to 70% rubber crumbs), direct
coating (up to 50% rubber crumbs). The final, most resistant layer using crumb rubber
protects all underlying layers.

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6. Structural fiber-reinforced concrete. Metal and textile cord are mixed in a certain
proportion with rubber crumbs and added up to 50% to the dry cement-sand mixture.
Used for deep pouring of foundations. Covering floors and stairways in areas with heavy
traffic. Polyurethane is mixed with 50% fine (fractions less than 3 mm) purified crumb
rubber. Suitable for both indoor and outdoor spaces. Due to its properties, fiber-
reinforced concrete is used in regions with harsh climatic conditions, including
permafrost regions.

7. Finishing building material. The thiokol (polysulfide) system, as a standard material,

and crumbs (less than 1 mm) form a durable covering material, used both as a finishing
and decorative wall material.

8. For road surfaces. Crumb rubber is used in the latest generation of road surfaces. The
road base can be filled with a mixture of coarse rubber crumbs, metal cord and textile
cord up to 50% by weight with mineral additives. Further, crumbs act as an asphalt
bitumen modifier (crumbs less than 1.5 mm up to 10% by volume), which is the outer
working layer of the road surface. The advantages are obvious: the physical and
mechanical characteristics of the entire coating are significantly improved (increased
resistance to cracking and elasticity, as a result of which the frost resistance coefficient
increases by 20-30%), which has a positive effect on the resource, the service life of the
road surface increases by 2-3 times.

9. Tire restoration. Obtaining regenerate. Up to 10% of the mass of crumb rubber

obtained from tire recycling can be used in retreading and making new tires. For the
production of reclaimed rubber, crumb rubber with a fraction of up to 2 mm is mainly
used.

10. For the manufacture of car parts. Bumpers, mud flaps, oil seals, mats, luggage
compartment trays, handles, etc. Small fraction rubber crumbs are used as an additive
in various automotive mastics.

11. Coatings for bridges. When repairing bridges, the joints are usually sealed with
imported materials. The use of crumb rubber obtained from the processing of tires in
this direction will allow the use of 100% domestic materials, resulting in savings
throughout the country.

12. Supports of main pipelines. When replacing existing supports located in permafrost
areas, it is very advantageous to make new concrete supports with the presence of crumb
rubber.

13. Servicing the oil and gas industry. For plugging oil wells during drilling,
waterproofing green formations, for producing sorbents for collecting oil and oil
products from the surface of water and soil.

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Textile cord

The main areas of application of textile cord are: production of fiber-reinforced

concrete, filling of sports equipment, production of mixtures for plugging wells during
well drilling and geological exploration, and much more.

Metal cord

In the production of car tires, namely in the seat ring (thick bead wire), high-alloy steel
is used. When processing tires on the line, metal wire (shavings) is formed, which is
sold as scrap metal.

Main consumers of products:

A special feature of the tire processing line is its high focus on manufacturers of safety
coatings, the production of crumb fractions that are best suited for the production of
tiles, as well as other coatings based on crumb rubber.

However, as follows from the analysis of the areas of application of crumb rubber, there
are much more possible consumers of crumb, so active study and search for new
consumers is proposed.

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Large consumers include: construction companies; manufacturers of sports surfaces;

manufacturers of road surfaces based on modifiers using crumb rubber; manufacturers
of rubber products, companies serving the oil industry;

A special direction in promoting the product - crumb rubber - is regional and city
administrations. Recently, sports development programs (construction of sports
facilities where crumb rubber is used in large quantities) and other socially significant
projects have been included in the budgets of various levels. Thus, in addition to creating
the image of an environmentally-oriented and socially significant company, a serious
expansion of sales is possible.

Risks.

During the full production cycle, starting from the delivery of raw materials, operation
of equipment and ending with the sale of finished products, there is a possibility of the
following risks that could cause damage and loss:

1. Malfunctions of technological equipment.

This risk is minimized by constant strict technical maintenance. servicing the line in
compliance with the deadlines of the software; improving the qualifications of personnel
servicing the line; compliance with the warranty conditions for the operation of the line;
timely replacement of consumables.

2. Disruptions in the supply of raw materials.

This risk is minimized by concluding long-term contracts with suppliers of raw

materials in advance. It is recommended to start building a tire collection system,
collecting tires simultaneously with the signing of the line purchase and sale agreement.
Search for alternative sources of raw materials.

3. Overstocking of finished products due to difficulties in sales.

To minimize this risk, it is advisable, from the moment the project is launched, to
develop sales channels for rubber powder in nearby regions, to establish long-term
relationships with companies producing products from crumb rubber. As an option,
concluding preliminary contracts for the supply of crumb rubber, participating in tenders
for the supply of materials for the arrangement of sports facilities and playgrounds.

4. Damage to products during storage.

Crumb rubber as a product does not require special storage conditions. The crumbs
packed in PP bags are stored in a cold warehouse. It is important to prevent moisture
from getting into the crumb rubber.

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Need for investment.

Total investment requirement – up to 7,50,000 euro _

Sources of funds: own funds, debt financing, leasing , projects, grants .

The funds will be used to create an enterprise, build a production facility, purchase
equipment, organize production, and organize sales of finished products.

Production plan.

This section presents data on the processing technology, production plan and cost plan
of this business plan.

Production technology.

The proposed line for processing tires into crumb rubber is an automatic line designed
for grinding worn-out automobile tires with metal and fabric cords into crumb rubber.

Small Lines for processing tires into crumb rubber can process up to 3,500 tons of tires
per year, while receiving up to 2,500 tons of crumb rubber.

Technical characteristics of equipment for processing tires into crumbs

At the first stage of work, the material is prepared for further grinding. In order to reduce
operating costs and reduce the time spent on line maintenance, at the first stage of tire
processing, a truck tire is cut into pieces, which are fed to the loading conveyor into the
primary shredder.

Human participation in the above-described operation ceases. The entire further process
on the line takes place automatically.

The prepared parts of the worn tire are transported via the loading conveyor to the
primary shredder. This unit was developed taking into account the analysis of the
operation of similar foreign devices and is characterized by high performance,
incomparably low energy costs, reliability, convenience and ease of maintenance.

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After processing in the primary shredder, tire pieces measuring 50-70 mm enter the next
working unit, where they undergo further grinding and separation of the bulk of the
metal cord. At the output we get a rubber chip measuring 20 x 20 mm with textile cord,
as well as a small admixture of metal cord, the remains of which will be separated at
further stages of processing of the car tire.

The further production scheme of the final processing cycle (using a set of sequentially
installed impact crushers with a pneumatic conveying system) is an excellent
engineering solution, thanks to which we were able to obtain the following advantages
on the line :

- reduction of energy costs and, accordingly, the cost of the final product in the
production of rubber granules, which allows the User to receive more profit in
comparison with competitors working on other equipment;

- small dimensions of the technical infrastructure, which is due to the lack of a conveyor
belt system. This gives the User more opportunities to place the equipment in the desired
location, makes it easier to find the installation location of the equipment, and also has
a positive effect on the ease of maintenance due to the simplification of the entire
interacting working system;

- in addition to reducing the size of production facilities, the use of pneumatic transport
has a beneficial effect on the quality of crumb rubber, which, as it travels through the
air duct system, is cooled and retains the original properties of rubber in the best possible
way throughout the entire cycle. This fact is a huge advantage in comparison with the
state of the rubber granules obtained on lines with a return cycle function, in which the
inappropriate size crumb is returned along the return conveyor to the shredder (or
granulator), in which it is repeatedly heated, losing its properties;

- environmentally friendly production, the absence of any harmful emissions and

emissions during the mechanical crushing of tires;

- use of the offered high-quality

crushers allows you to get the product

similar to that obtained from granulators,

but with much lower production

and operating costs.

- the resulting product:

• 3-4 mm;

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• 5-6 mm;

• 0.1-2 mm.

Equipment for tire processing and crumb rubber production

The technological line for processing car tires into crumbs “has a design capacity of 400
kg/h to 3000 kg / h for loading. This indicator is based on practical experience in
preparing raw materials for loading into the primary shredding system, and can be
changed upward with faster preparation of the tire for shredding, which is facilitated by
the potential of the primary shredding shredder.

The line involves the processing of both passenger and truck tires with a maximum
diameter of 1200 mm and a width of 300 mm.

Depending on the raw material ( European- made tires with metal and textile cords or
foreign ones, only with metal ones), the yield of a clean finished product is 60–70% of
the initial mass of raw materials, of which ≈ 70% will be rubber granulate with the most
popular fraction of 2–4 mm , ≈ 15% with a fraction of 0.1 – 2 mm ≈ 15% with a fraction
of 5 – 6 mm.

Productivity up to 3 0 00 kg per hour for incoming raw materials and up to 20 00 kg per

hour for crumb rubber output

Average power consumption up to 86 0 kW/h

Staff 8- 1 5 people

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Recommended room 7 00 m²

Annual production of crumb rubber, 365 days a year, up to 8,000 tons of finished crumb
rubber.

Name of equipment

1 Guillotine for cutting truck tires 1

2 Bead ring puller 1

3 Loading belt conveyor 1

4 Primary shredder system 1

5 Transport fan 2

6 Small cyclone collections 2

7 Pneumatic conveying system 1

8 Magnetic separation system 3

9 Crusher complex 1

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10 Vibrating screen system 2

eleven Cyclone compilation 1

12 Dust removal system 1

13 Electrical equipment, wiring, electrics, etc. 1

14 System of connecting metal structures and protection 1

15 Conveyor belt for metal cord 1

INVESTMENT NEED:

1. Capital equipment – 3,50,000 euros

2. Libra 10,000 euros

3. Bag stitching machine 8,000 euros

4. Crumb bags 10,000 euros

5. Construction of production and warehouse premises – 100,000 euros

6. Commissioning works 10,000 euros

7. Vehicles – 80,000 euros.

8. Forklifts – 20,000 euros

9. Website creation and promotion on the Internet: up to 5,000 euros.

10. Electricity connection – 20,000 euros.

11. Costs associated with obtaining licenses and permits : up to 15,000 euros

12. Additional expenses (oil, keys, premises rental, etc.) are about 50,000 euros.

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13. Connection of high-voltage power lines – 20,000 – 50,000 euros.

14. The cost of obtaining permits is 15,000 euros.

15. Unforeseen expenses – 10-15% of the budget.

In the structure of costs for the acquisition of equipment, 80 % falls on the acquisition
of capital equipment ( crumb rubber production lines) and the construction of the
Building as fixed assets.

Number of personnel for the project.

For the normal functioning of a tire processing plant with a capacity of 100 tons per
month, a staff of 8-12 people is required. The monthly wage fund will be no more than
15,000 euros

“Structure of revenues by type of product produced at 100% load”

Calculating the profitability of a tire recycling project

For the convenience of calculating the profitability of the project, we take as a basis the
minimum indicators for the production of finished high-quality crumb rubber.

Minimum recycling of worn tires per month = 100 tons.

The yield of crumb rubber is 70 tons.

The output of metal cord is 20 tons.

Textile output 10 tons.

Sales of manufactured products and services for utilization and recycling of tires

Crumb rubber (70 tons at an average price of 1.2 euros per kg.) = 84,000 euro _

Metal cord (20 tons at an average price of 0.25 euros per kg ) = 5,000 euros .

Textiles (10 tons at an average price of 0.10 euros per kg ) = 1,000 euros .

Acceptance of tires for processing from enterprises and individuals in a volume of at

least 100 tons per month, at a minimum acceptance price of 80 euros per ton. = 8,000
euros .

Total: Minimum monthly turnover = 98,000 euros .

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Production flow plan

The following operating expenses are planned for the operation of a crumb rubber
production company:

• Costs for staff salaries, as well as insurance premiums no more than 15,000 euro
;

• Expenses for the purchase of containers (bags) for packaging with a capacity of
up to 30 kg; = 5,000 euros per month;

• Vehicle maintenance costs – 5,000 euros.

• Expenses for communication services = 1,000 euros per month;;

• Household expenses = 2000 euros per month;;

• Separately, the costs of electricity consumption are taken into account, which
largely depend on the production load (average electricity consumption on
production equipment is up to 860 kW/h - calculated relative to the volume of
crumb rubber production) at the rate of 0.27 euros / kW = about 7,740 euros per
month;

• Rental payments for a premises of 8,00 square meters will be 5-10 euro ./sq.m.
per month; = no more than 5000 - 8000 euros per month;

• Line maintenance and other expenses will not exceed 3,000 euros per month ;

• Logistics costs no more than 5,000 euros per month ;

• The cost of replacing knives will be 5,000 euros . per month;

• Garbage removal up to 1,000 euros per month;

• Depreciation of fixed assets is 10% per year.

Total: Cost part = 57,740 euros per month.

Overall revenue indicator

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Profit 98,000 – Expenses 54,740 = 40,260 euros (minimum monthly profit) for 100
tons of raw materials , in the form of used car tires.

Please pay special attention to the fact that these tire recycling figures are taken in
minimum terms. Depending on the raw materials, working conditions, specifics of the
region, seasonality and other factors, this figure may be increased. Starting from the
release of finished products and selling them at a higher price, ending with a higher
price and volume for receiving tires from enterprises, metal and textiles.

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