THE CHALLENGES OF END-OF-LIFE TYRE RECYCLING IN MALAYSIA & LESSONS FROM A FAILED PYROLYSIS PROJECT

Sustainable Development Goals

Organizations Involved:
Klean Industries, L&S Trading, Menanjung, Pell Frischmann, Worley Parsons, Pegasus Capital Advisors 
Services:
Design & Engineering, Turn-Key DBC, Due Diligence, Supply Chain Management, Component Supply

Malaysia generates over 32 million end-of-life tyres annually, yet the country’s tyre pyrolysis sector is plagued by regulatory failures, illegal plants, and unproven technology. In this case study, we review a US$80M project that attempted to revolutionize tyre recycling but collapsed due to poor planning. Learn how Klean Industries’ proven, commercial-scale pyrolysis technology ensures successful, bankable projects in Malaysia and beyond.

The Challenge: Malaysia’s Growing Tyre Waste Crisis and the Risks of Poor Project Planning

Malaysia is facing a major environmental crisis with the management of end-of-life tyres (ELTs). With over 36.3 million registered vehicles as of October 2023, the country generates an estimated 32 million scrap tyres annually (equivalent to 300,000 metric tonnes). However, weak government regulations, illegal dumping, and unregulated pyrolysis operations have led to severe environmental pollution, including toxic emissions and soil contamination.

Adding to this problem is the influx of low-cost, poorly designed pyrolysis plants from China. These illegal operations continue to be uncovered yearly, further damaging Malaysia’s recycling industry and hindering the growth of legitimate, sustainable solutions. The lack of government enforcement, proper tyre collection systems, and long-term offtake contracts has made establishing bankable projects that ensure long-term success difficult.

The Background: The Octagon Consolidated Berhad (OCB) Waste-to-Energy & Pyrolysis Project

Octagon Consolidated Berhad (OCB) embarked on an ambitious waste-to-energy (WTE) and tyre pyrolysis project in the early 2000s. Initially focused on municipal solid waste (MSW) conversion, the company aimed to build a 1,200 tonnes-per-day plasma gasification plant in Melaka, capable of generating 35 MW of renewable energy.

At the same time, OCB expanded into waste-to-fuel pyrolysis, securing government support to establish an Integrated Waste Tyre Collection and Management System (IWTCMS). The initiative was intended to replace landfilling and illegal dumping with a fully regulated circular economy solution for waste tyre processing.

Key Players in the Project:

• Advance Pyrotech Sdn Bhd (APT): A subsidiary of OCB responsible for the continuous tyre pyrolysis project.
• KK Incinerator Eng. & Const. (KKIECM): The South Korean technology provider for the pyrolysis system.
• Government Agencies & Regulators: Provided approvals and incentives to support waste-to-energy and tyre recycling initiatives.

With an initial US$ 25 million in funding secured in 2006, construction began on a 60-tonne-per-day continuous tyre pyrolysis plant, which was later planned to expand to 120 metric tonnes per day.

The Solution: A Project Doomed by Critical Failures

Despite early momentum, the APT pyrolysis project suffered severe flaws, leading to delays, cost overruns, and eventual failure. By 2007, the project had already missed its Commercial Operation Date (COD), and by 2008, OCB transferred ownership to Dongsung KK to salvage the project.

6 Major Reasons Why the APT Pyrolysis Project Failed

❌ 1. No Bankable Long-Term Feedstock Contracts

• The project never secured a reliable supply of waste tyres, making operations financially unviable.
• The Malaysian government allowed unlimited scrap tyre imports, which was not a sustainable long-term strategy.

❌ 2. Unproven Technology at Scale

• The KKIECM pyrolysis system was based on a small-scale prototype and had never been tested commercially at 120 TPD capacity.
• The system suffered significant operational inefficiencies and could not meet design output specifications.

❌ 3. Poor Cost Estimation & Project Planning

• The project experienced runaway costs due to a lack of detailed engineering analysis.
• There was no contingency plan for unexpected construction or equipment failures.

❌ 4. No Viable Offtake Market for Carbon Black (Char)

• The pyrolysis process produced low-value carbon char instead of high-quality recovered carbon black (rCB).
• Without an established offtake agreement, the char had little market value.

❌ 5. Poor Quality Pyrolysis Oil with No Refining Infrastructure

• The low-grade oil output had limited commercial applications at the time.
• The project lacked oil upgrading or refining capabilities to improve product quality.

❌ 6. Lack of Industry Expertise

• The management team had no prior experience in tyre pyrolysis.
• Critical technical and financial risks were overlooked, leading to operational and economic collapse.

The Outcome: A Costly Mistake and a Hard Lesson for Future Pyrolysis Projects

By 2014, the project was bankrupt, and Malaysia’s Department of Insolvency (MDI) reached out to Klean Industries as a potential buyer. Recognizing the failed project as a valuable case study, Klean conducted a Detailed Feasibility Study (DFS) with Worley Parsons Malaysia to evaluate its salvageability.

By 2017, the failed facility was decommissioned and dismantled under the supervision of Klean Industries Malaysia Sdn Bhd. This project remains one of the most expensive failures in the history of tyre pyrolysis plants, with approximately US $80 million in losses, reinforcing the importance of expert-led planning, proven technology, and strong contractual frameworks.

Key Takeaways: How to Avoid These Costly Mistakes in Your Tyre Pyrolysis Project

• ✅ Secure a Bankable Feedstock Supply: A tyre pyrolysis project is not viable without guaranteed long-term tyre sourcing contracts.
• ✅ Use Only Proven, Scalable Technology: Pilot projects do not equal commercial success—choose established, high-performance systems.
• ✅ Ensure Accurate Cost & Engineering Planning: A detailed financial and operational model is crucial to prevent cost overruns.
• ✅ Develop a Strong Offtake Strategy for Recovered Products: Pyrolysis only works when the output materials (rCB, oil, and steel) have a solid buyer market.
• ✅ Work with Industry Experts from Day One: Poor project planning can lead to total failure, costing millions.

Why Klean Industries is the Best Choice for Tyre Pyrolysis & Circular Economy Projects

Unlike failed projects like APT’s pyrolysis plant, Klean Industries has a proven, commercially successful pyrolysis technology that is already operating at scale.

Why Klean is the Global Leader in Tyre Pyrolysis:

• ✅ Over 20 Years of Industry Experience: Leading commercial tyre pyrolysis projects worldwide.
• ✅ Advanced Pyrolysis & Carbon Upgrading Technology: Producing high-quality recovered carbon black (rCB) and low-carbon fuel oil.
• ✅ Guaranteed Feedstock & Offtake Solutions: Helping clients secure long-term supply and buyer contracts before project launch.
• ✅ Financially Bankable Projects: Engineered for strong ROI, scalability, and compliance.
• ✅ Global Track Record of Success: Trusted by industrial leaders, engineering partners, government agencies, and investors.

Learn how we can help you avoid costly mistakes and successfully develop a tyre pyrolysis plant that delivers actual financial and environmental results.

If you would like to learn more about this project, please get in touch with us now >> GO.

This project addresses the United Nations Sustainable Development Goals (SDGs) by considering the goals and associated targets illustrated by the WBCSD’s Tire Industry Project (TIP). TIP offers a framework for action that outlines impactful pathways for the tire sector to contribute to the ambitions of the SDGs. To learn more about how Klean's approach, solutions, and technologies contribute to advancing the SDGs, please review the report "Sustainability Driven: Accelerating Impact with the Tire Sector SDG Roadmap." See: https://www.wbcsd.org/Sector-Projects/Tire-Industry-Project/End-of-Life-Tires-ELTs