'Tire fire of a deal' still raising burning questions in Sask. legislature

Saskatchewan's scrap tire industry was top of mind again in Regina Tuesday as politicians and advocates continued to probe into how an American company became the province’s only recycler.

Executives from Shercom Industries, a Saskatoon company that recycled the province's used tires until last May, were in Regina to voice their concerns about a deal to award the province’s tire recycling contract to California-based Crumb Rubber Manufacturers (CRM).

"Who would want to be responsible for this tire fire of a deal?" Regina-Elphinstone MLA Meara Conway asked during Tuesday's question period at the legislature.

Conway's question was directed at Environment Minister Christine Tell, who oversees the Tire Stewardship of Saskatchewan (TSS), a non-profit established in 2017 to run the province's scrap tire program and recycling.

The tire stewardship has come under criticism after the NDP questioned its role, and the province's handling of the program, after its 2022 decision to create two recyclers in the province. As a result, Shercom would lose half its potential recycling revenue, and opted to close its plant instead, laying off dozens of employees.

"Now their company has to order product outside of Saskatchewan," Conway said. "In their words, 'none of this makes any sense.'"

In the wake of the 2022 decision to break up its monopoly, Shercom argued it couldn’t sustain its recycling business with access to only half of the province’s scrap tires.

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California-based CRM signed its contract later that year to work out of a facility in Moose Jaw to cover the southern part of the province, and a request for proposals was issued for the northern zone.

The winning bidder has not been announced, but Shercom never bid.

"We're back to 25 years ago where there's a single shredder sitting in Moose Jaw, shredding the tires for size reduction just to ship them out of the province," Shercom president and co-founder Shane Olson said.

Shercom says it didn't bid for the southern plant because it believed it was precluded from the process after trying to privately negotiate a deal with TSS, and it doesn't believe the province produces enough tires to necessitate a second plant in the north.

Olson said other jurisdictions like Alberta, B.C., and much larger American states have only one recycling plant.

"It didn't economically make sense because of the economies of scale," Shercom CEO Mike Richards said.

"We would have almost admitted to needing two processors, so ethically it didn't make sense for us either."

The Greater Saskatoon Chamber of Commerce CEO Jason Aebig wrote a letter addressed to Tell asking questions about the "short sighted" decision, calling on the province to increase accountability and meaningful oversight.

"We are convinced that there are wider issues with the current structure, mandate and direction of TSS that need to be addressed," Aebig wrote in his letter.

The chamber suggested four recommendations to the Ministry of Environment: establish a minimum, guaranteed supply of scrap tires, change the composition of the board to include independent representatives rather than industry representatives, and release a market feasibility report undertaken last year.

Tell said the report, which was requested by Premier Scott Moe last year shortly after Shercom laid off dozens of workers, was completed by TSS and isn't for government to publicize.

She said some of the chamber's recommendations were detailed in the report.

"We'll look at them, and definitely he has some concerns and a right to be heard," Tell said.

"Government should never shy away from making regulatory, statutory (or) legislative changes when they are necessary."

Rather than recycling tires and turning that product into a variety of rubber materials, Shercom is now importing 2 million pounds of rubber every month.

According to Olson, Shercom told TSS it wanted three things during contract renewal negotiations in 2020. It wanted some influence in the future of the industry, an assured tire supply and an increase in its tipping fee.

TSS issued a lengthy statement Tuesday afternoon detailing tire recycling in Saskatchewan.

"It is unfortunate that past efforts to negotiate a new contract with Shercom Industries over many months of mediation failed. Terms offered by TSS were unacceptable to Shercom, and conditions required by Shercom were unacceptable to TSS," the statement read.

Olson said language included in the initial request for proposals excluded Shercom from bidding, a claim TSS denies.

"It was never the intent of TSS to exclude Shercom from the RFP process, however it is the position of TSS that Shercom chose not to respond. Processors are not given exclusive ‘rights’ or ‘entitlements’ to scrap tire volumes and all contracts come up for renewal over time," TSS said in its statement.

With plenty of scrutiny surrounding tire recycling in Saskatchewan over the last week, Olson feels people and organizations are beginning to ask the right questions, but he's not convinced the process is fair.

"Shercom became the only processor in the province because that's what the free market determined," Olson said.