Stockholm – Michelin is investing in Swedish tire pyrolysis company Scandinavian Enviro Systems AB, as part of a move to improve its sustainability portfolio and to help scale up Enviro’s recycling technology.
The two sides have signed a letter of intent (LoI) regarding a long-term partnership, which will see Michelin acquiring 20% of Enviro’s shares and becoming the company’s largest shareholder, the companies announced in separate statements 15 April.
As part of the deal, Enviro will conduct a private placement of SEK32.5 million (€3 million), by which Michelin Ventures SAS will subscribe for 116,165,223 shares (20% of the shares) of the Stockholm company.
The placement, according to Enviro, is expected to be completed shortly after this announcement and by 29 April, at the latest.
Based on the LoI, Enviro can collaborate with other tire makers or suppliers to the tire industry until 31 July.
A final agreement on the partnership is expected to be signed by mid-year, the company added.
Enviro has developed a process using its "proprietary technology" to recover oil, steel and carbon black from end-of-life tires.
The deal with Michelin includes a joint supply agreement between the two companies and will look to scale up Enviro’s pyrolysis technology through a “jointly owned” tire recycling plant.
Michelin said it would bring its "industrial know-how" to the plant's construction project and contribute its technologies in R&D, development and production.
Enviro, the French tire maker added, will "bring its patented pyrolysis technology, which will produce high-quality products."
In addition, the two companies will work towards expanding the applications for the materials recovered through the pyrolysis process.
Michelin said the partnership "fits perfectly" with its "all sustainable" vision, which targets an 80% sustainable content in the company's products by 2048.
"After the acquisition of Lehigh Technologies in 2017... this is a further proof of Michelin's long-term commitment to recycling and sustainable mobility," said Sonia Artinian-Fredou, services and solutions, high technology materials business director, Michelin.
Enviro said the partnership would provide it with “significantly improved conditions” for the establishment of its recycling plants globally.
"This collaboration means that we can become established globally in a way that we would never have managed alone,” said Enviro’s chairman Alf Blomqvist.