RPM Automotive Group to tackle end-of-life tyre wastage with new Melbourne recycling facility

RPM Automotive Group (ASX: RPM) hopes to reduce nationwide end-of-life tyre wastage with the opening of a $4 million recycling facility in suburban Victoria and the launch of an associated tyre recycling program.

The Stage 1, 3,500 square metre facility is currently processing more than 180 tonnes of used tyres per week and has scope to increase this to more than 300t per week.

At full capacity, the recycling facility will see RPM capture around 5% of national market share.

Recycling program

RPM is ramping up its recycling program, which aims to address a critical environmental challenge by repurposing tyres that would otherwise end up as landfill.

The program will access the company’s existing distribution network and customer base to collect and recycle up to 54,000t of end-of-life tyres within the next five years.

The company plans to create recycled rubber-based products from the scrap tyres for use in applications such as road infrastructure and as low-grade diesel fuel for industrial kilns, mills and power plants.

Tyre scrapping

Research shows more than 1 billion tyres are scrapped each year worldwide; 56 million of them in Australia.

The recovery rate for off-road heavy machinery tyres currently sits at just 10%, with the remaining 90% often disposed of on-site.

The ban Australia’s federal government placed on the export of waste or scrap tyres in December 2021 has increased demand for domestic sustainable solutions.

RPM’s recycling program aims to address end-of-life tyre waste, where a significant gap remains between the volume of waste produced and the amount successfully recovered.

Capital raising

RPM comprises a number of businesses involved in tyres, mechanical repairs, motorsport apparel and safety equipment, niche manufacturing and a roadside assistance service for the transport industry.

The company launched a $4m capital raise last year to primarily fund Stage 1 and Stage 2 of its tyre recycling program.

The two-tranche placement issued approximately 56 million new fully paid ordinary shares at $0.072 each, plus an equal amount of free attaching options.

Improved performance

RPM has reported an improved performance in the three months to end March, driven by the normalisation of trading conditions, better buying and strong demand for its product range.

The company recorded sales revenue of $89.9m for the period, representing a 1.4% increase on the previous corresponding period.

EBITDA for the quarter was up 8.2% on the previous period to $9.5m.

Positive outlook

Chief executive officer Clive Finkelstein said the business outlook remained positive.

“Our focus this quarter has been on our tyre recycling business, which offers an exciting growth avenue and which we are confident will exceed original processing forecasts,” he said.

“I am also pleased to report that our traditional businesses continue to perform in line with forecast projections.”

“We remain confident in the outlook for financial year 2026, which will see a continued focus on controlled operating expenses and improved margins fuelled by stable customer demand.”