Conversation with Dr. Mehran Zarrebini, CEO of Van Dyck and Mathe Group
- A major barrier to securing a waste management license has been removed
- Developing and educating the market is key to growth
- Shipping within the region continues to be expensive
I’m Mehran Zarrebini, CEO of Mathe Group, and also Van Dyck. At Mathe Group we process radial truck tires and manufacture rubber crumbs and at Van Dyck, we take the rubber crumbs and manufacture different kinds of products for secondary industries.
Acquisition of Mathe Group in 2016
At the time, we were manufacturing soft flooring and were looking at ways to utilize recycled content in the flooring, and obviously, we came across rubber crumbs. There were very few recyclers of the product in South Africa at the time, so we were importing the material from France initially, which didn’t make any sense at all, because of the freight and environmental consequences of transporting processed rubber all the way from France to South Africa. Eventually, we came across a new company, which had recently established itself in Kwazulu-Natal, not far from our premises, and that entity was headed up by Mr. Mathe who had founded that company, so we started to experiment. We developed some new products that went extremely well in the market and then we started to utilize so many rubber crumbs that, unfortunately, he couldn’t actually cope with the volume. So, from not having any customers to having excess, was a good situation to be in. We got on extremely well, and then decided in 2016 that maybe it would be an opportune time to do a joint venture where we would invest in new plants and machinery, and set up a new premise with far greater capacity than what he originally had. And it’s largely been a success story from there.
South Africa’s Waste Tires
In South Africa, there are a large number of redundant ties that are generated per annum. And an unfortunate consequence of it is that many of them have ended up in landfills, and also in previously disadvantaged areas, which have obvious environmental impacts on communities that live in those areas. So, the government looked at a model whereby they would set up and administer a tire waste management plan that addresses one of the biggest concerns when we originally started, which was logistics.
One of the biggest concerns when we originally started … was logistics.
There are lots of waste tires dotted all around South Africa, and being a big country, how do we transport all those tires to our premises in order to recycle them? We were very fortunate at the time that the government implemented the waste management plan. This took away the logistics handling from us, so we didn’t need to get involved in getting the used tires to the factory, and were just largely able to focus on the processing of those ties into rubber crumbs, which is what we’ve done.
Focus on used truck tires
South Africa has a huge number of tires of different types, they not only have mining tires, but they have passenger tires, and truck tires. We primarily focused on processing radio, truck tires, for use in the products that we manufacture. We did this because the plant we have is geared towards processing truck tires, largely because it has low fiber content and high steel content. We are able to separate the steel from the rubber and we really have more or less zero waste because the fiber content is so little. What we do with the fiber content is process whatever we generate into some of the products that we manufacture so that it doesn’t go into the landfill as well.
Also, there has been a preference from many of our clients to utilize crumbs derived from truck tires, possibly because of the higher rubber content and less chemical content, and also, specifically, because many of those truck tires are actually manufactured in South Africa.
Another reason for this preference is that because we’re supplying the sports industry, we have to be very stringent with respect to toxicology, toxicology tests, and also with polycyclic aromatic hydrocarbon tests, So, if we’re using one particular source of tires, then we can more certain that the chemical content of the tires is standard
Products we manufacture from recycled tires
On the acoustic side, we are manufacturing acoustic underlay, which is normally utilized under timber floors or luxury vinyl planks and that type of thing. We manufacture the patented product, which is an acoustic cradle, the majority of which is used extensively in the United Kingdom, although we’ve started to develop some areas in South Africa. We’ve recently exported some to Senegal as well, and those are like mini tables which are inverted, but then you’re able to run the battens along underneath so you can run all the cabling and everything like that, and then create the flooring on the top, but you can actually vary the height, so it minimizes or reduces the amount of time it takes to install a particular floor and dramatically reduces the cost of installation.
So those are two quite novel ones.
Others are in artificial sports systems where we manufacture various types of floors and projects for hockey dugouts for the athletes. We’ve also seen expansive use in CrossFit gyms and various kinds of gyms, whether it’s for home gyms or commercial purposes.
Also in walking areas around shopping centers or in playground systems, where for instance, there’s stringent legislation with regard to critical fall heights. If children are falling from playground equipment, they can fall onto a soft surface. Instead of using, for instance, shock pads and artificial grass on second floors, they can fall directly onto rubber flooring.
We also do work for the equestrian industry where we use rubber in both stables and in various kinds of arena settings where horses can hurt themselves. The industry is extremely costly, and any kind of damage can have huge financial consequences.
We’ve also looked at other innovative areas. And one of the areas that we’ve developed is ballistics shooting blocks manufactured from recycled rubber crumbs. What we’ve made are actually Lego-type pieces, which can build up a back wall as a backstop for shooting ranges. This is used by the police force for training purposes and various kinds of indoor recreational shooting range in South Africa.
Other product alternatives
When we set up the processing plant, we envisaged actually only supplying ourselves with rubber crumbs. But we realized that we had such a huge excess capacity that we started to look at other alternative industries that could potentially use the products, one of which is the bitumen asphalt industry where it goes into the resurfacing of roads and another is in the sporting industry where it is used for example, in soccer in artificial grass, as an infill layer together with silica sand in that product. But due to health concerns around the world, we’re seeing a shift away from its use in artificial grass.
We have strong and established relationships with some of our customers, especially those who work in the road development and rehabilitation industry, where we work very closely with them to develop products that are suited to their requirements. In South Africa, the road system is expanding all the time, a lot of freight is actually transported around the Southern African region by road, unlike, in many European countries which have a preference for rail.
On the sporting side, projects come and go. There’ve been many projects within the SADC region. FIFA has been very active in the SADC region sponsoring many development projects in African countries for quite some time, we see that continuing to grow and we’ll see whether the rubber crumbs will be utilized as an infill going forward in those areas.
We’ve invested in capital equipment to manufacture more unique types of products that were previously either imported into South Africa or were manufactured on a very small scale. So, we are developing some of the other niche products that we’re hoping to export around the world and that will increase the demand for rubber crumbs going forward and help with the environmental problems.
We export to the SADC region, where we work closely in places like Botswana, Mozambique, Zimbabwe, Swaziland, and we go as far up as Tanzania, and Kenya. We are looking at developing export markets further afield, but then as soon as you get further up to East Africa you start to compete with Dubai and places like China, where there’s a strong influence of their products in those respective countries. So predominantly within the SADC region.
We’ve established a strategic alliance with an innovative British company that’s well placed in the construction industry but focuses mainly on acoustics. We manufacture some unique products for them, which are patented and exported around the world, in more than 40 to 50 countries so far, including the UK and South Africa. It’s an acoustic underlay, which is used underneath hard flooring, and it has all the acoustic benefits, especially if you’re looking at environments where they have legislative requirements with regards to noise abatement in high-rise buildings.
We are manufacturing magnetic underlay that will minimize the time and cost of floor installations. You’ll actually be able to use magnetic tabs to kind of adhere the floor directly to the underlay itself. And if there’s a requirement to remove the product due to damage or anything like that, it can be very simple to remove without having to recreate the flooring because we used adhesive onto the base. So that’s another product that we’re currently developing.
Initially, when we started, there were very stringent requirements to fulfill because of South Africa’s very tight environmental laws. Getting a waste management license, which was a major barrier to entry for new entrants into the marketplace, has now been removed. Even as pre-existing re-cyclers at the time, it took us close to six to eight months to get a new waste management license. A number of large changes since 2016 have made it far easier for anybody who’s willing to establish themselves to become a recycler of tires. One obviously has to register with the waste Bureau, which is the entity that’s currently managing the plan at the moment.
A number of large changes since 2016 have made it far easier for anybody who’s willing to establish themselves to become a recycler of tires.
Our current challenge is in shipping material around the country, which is incredibly expensive. Sometimes it’s even more costly than the actual raw material itself, and when we are moving products within the SADC region, logistics is a huge challenge. And that’s where we come face to face with many European manufacturers. And it’s often easier and cheaper for them to ship products from Europe because they’re heavily subsidized, into Africa than for us to export products to our neighboring countries. So that’s one of the challenges that we face at the moment.
Another is in trying to develop the market. Many clients are often used to what they’ve been using for the past 20 years, and it’s trying to create the knowledge and the marketing material in order for them to switch to these new kinds of products. But often there is a preference, especially with environmentally conscious customers, for recycled products and environmentally sustainable products, which can be recycled again after their useful life. So that’s the angle that we’ve been focusing on for the past couple of years.
Barrier to entry
One of the biggest challenges is equipment importation into the country.
From the South African business perspective, the costs are extremely high and the recovery of those funds from return on investment tends to be a lot longer than it would be in a more mature market, like in Canada, The US, or Europe. I believe that’s a huge barrier to entry, which is stopping a lot of people from coming into the country because it’s also a market that’s in its infancy, you don’t have a pipeline of customers and the demand is not always there. So, in order for you to finance this kind of level of equipment, you often need to demonstrate that you have the demand there. And that’s not always easy. So, I think that’s one of the biggest challenges from a processing perspective.
One of the biggest challenges is equipment importation into the country.
In the secondary industry side, that is from a product perspective, it’s largely about gaining the confidence in the market that these products are complementary and can substitute many of the other products that are out there, and that there are some benefits besides the environmental benefits, for instance, with paving from transportation wise, they’re often lighter than a concrete paver, for instance. So, if you’re moving this type of cargo around the country, your transport costs are low. It’s these types of aspects that we have to focus on and educate many of our customers about the benefits of, but it’s sometimes a challenge.
I think it’s more of a demand problem, I think if the demand was there, and there were more companies and industries utilizing rubber crumbs, for industrial purposes, and not just the odd football field or playground type application, but more industrial applications like in construction.
I think that will allow more companies to enter into the marketplace and develop the industry even further, you know, competition is obviously healthy, because if there’s competition, then you have to innovate, and you have to, you know, become slightly more differentiated than everybody else in the markets place. So, I think if the demand was there, certainly more incumbents would enter into the industry.