When buying new tyres for your car, included in the price is a R2.30+VAT/kg levy which is intended to support the removal and recycling of waste tyres in South Africa.
However, despite the South African Revenue Services (SARS) collecting an estimated R5 billion from the so-called waste tyre levy since 1 February 2017, the country’s tyre recycling industry today is in dire straits.
From zero to hero, and back to zero
At the turn of the century, South Africa sat with a massive problem on its hands, this being old car tyres that were no longer fit for use filling up landfills and illegal dumping sites around the nation.
There were no formal initiatives at the time to recycle and reuse these products, and neither did government’s budget allow for such, which led to authorities starting to plan recycling strategies around 2006.
The National Environmental Management: Waste Act 59 of 2008 (NEMWA), enacted pursuant to the National Environmental Management Act 107 of 1998 (NEMA), was therefore established to provide a framework for waste management, and it included the concepts of Extended Producer Responsibility and the arrangements for Industry Waste Management Plans.
The Waste Tyre Regulations 2009 (WTR 2009) subsequently set a framework for dealing with tyres specifically, and envisaged that waste tyre management would be directly funded by tyre manufacturers and importers.
Enter the Recycling and Economic Development Initiative of South Africa (Redisa), which under the WTR 2009 devised a plan through which waste tyres could be converted from a linear into a circular economy.
The strategy included the collection, recycling, and redistribution of old tyres all of which were performed by local companies, none of which were owned or operated by Redisa, funded by a R2.30+VAT/kg levy which would be included into the prices of tyres by the producers and importers.
The strategy was officially gazetted in November 2012 and is colloquially referred to as the “Redisa plan,” gaining international recognition for its effectiveness.
Tyre collections kicked off in February 2013 and continued until 2017, with the country diverting roughly 98% of all waste tyres into the recycling industry over this period which in turn created over 3,500 employment opportunities, said Redisa Director Stacey Jansen.
Flow of funds in the Redisa plan
Things went well in the tyre recycling industry until they didn’t anymore.
On 29 November 2016, the Minister of Environmental Affairs at the time issued an Interim Directive attempting to take over full control of Redisa.
Come 1 June 2017, the Minister placed Redisa under provisional liquidation in 2017 due to the alleged misappropriation of funds obtained through the new tyre levy.
The case went all the way to the Supreme Court of Appeal, which eventually overturned the liquidation order in 2019, however, the damage was already done at this point, as the Redisa plan was “illegally destroyed” when the entity was thrust into liquidation two years earlier, it said.
While the court battle was ongoing, the Department of Environmental Affairs, which today is known as the Department of Forestry, Fisheries, and the Environment (DFFE), through its Waste Management Bureau (WMB), took over the reins.
Through the DFFE’s Industry Waste Tyre Management Plan (IWTMP), which also makes use of a R2.30+VAT/kg levy similar to the Redisa plan, the government started collecting and recycling tyres in 2017 but saw nowhere near the same success as Redisa.
Today, seven years later, South Africa is closing in on where it started out a few decades ago in terms of waste tyre management, in other words, it’s not looking good.
As per Jansen, who responded to queries from TopAuto, the most recent claim in the DFFE’s 2023/24 Annual Report (AR) is that 53,333 tonnes of waste tyres have been processed over the last year, equating to around 31% of the 170,266 tonnes of waste tyres arising over this period.
Jansen noted that this figure sounded quite a few alarms.
“The DFFE’s Annual Performance Plan for 2024/25, published just two months before the AR, estimates a rate of 17% or about half the claim in the AR,” said Jansen.
In addition, the baseline for the volume of waste tyres arising per year – 170,266 tonnes – has been unchanged since 2017.
“The figures from SARS for waste tyre levy collections allow you to work back to the total production figures. In 2022/23 SARS collected R745 million in tyre levies, implying production of 324,000 tonnes of tyres entering the market,” said Jansen.
“Allowing 25% loss for attrition in use and general ‘leakage’ gives an estimated waste tyre production of 243,000 tonnes. That would make the 2023/24 AP claim of 53,333 tonnes 22% of waste tyres arising.”
Jansen further highlights that the Auditor General chose to audit the claimed waste tyre diversion rate for the 2021/22 AR, which came to 12.52%, and it expressed the opinion that it was unable to validate the figure “due to the lack of accurate and complete records.”
Despite the shaky data provided by the DFFE with regard to its tyre repurposing performance, money from the waste tyre levy kept flowing in over the past seven years. We asked Redisa what these finances have been used for, if not for waste tyre management.
“Treasury has a policy of not ring-fencing levies and taxes, so the difference between what SARS collects and what is applied to waste tyre management is simply channelled to the State and falls into the general tax,” said Jansen.
“In 2023/24, the Waste Management Bureau spent a total of R482 million, leaving some R260 million in the tax pot, which is about 65% of the levy collection in State coffers.”
In Redisa’s view, this is technically not legally permissible as it goes against regulations set out by Section 13B(d) of the Waste Act.
“The Waste Act requires that the entire amount of the tyre levy be appropriated and allocated for the specific purposes of funding the work of the WMB relating to the management of waste tyres and the implementation of approved industry waste management plans,” said Jansen.
Immediate decline in waste tyre diversions and collections following the Interim Directive issued against Redisa in November 2016
Court battle brewing
Following the decline in waste tyre management between 2017 and 2024, Redisa is heading to court in a bid to get the DFFE’s recently approved IWTMP sent back to the drawing board.
The IWTMP provides a comprehensive framework for the “efficient and effective management of the waste tyre sector in a circular manner,” according to the DFFE.
The document has been in the works for several years and received a belated approval in March 2024 by ex-Minister of Forestry, Fisheries, and the Environment, Barbara Creecy, shortly before taking up her new position as Minister of Transport.
After receiving and reviewing the finalised IWTMP, Redisa immediately branded it as unlawful, irrational, unreasonable, and procedurally unfair, and it lodged a court application on 16 September 2024 to set aside the strategy.
“[The IWTMP] sets ridiculous processing targets, starting with a target for 2023 (!) of more than three times what was actually achieved in 2023 (from 35,355 tonnes per annum to 123,372 tonnes),” said Jansen.
“It then goes on to keep growing capacity every year, initially by 20%, decreasing but after 15 years still adding 4.4% (an extra 20,000 tonnes in that year), to reach a capacity of 457,000 tonnes by 2038.”
She said that if these optimistic goals were to be achieved, 2040 would be a disastrous year for the industry as all the old tyre stockpiles would be cleaned up, and a sector built to handle nearly 500,000 tonnes per annum would “fall off a cliff” with only 300,000 tonnes of new waste tyres available.
Secondly, Redisa argues that the IWTMP in its current form does not make adequate provisions for funding.
“This is a billion-rand operation, for which tenderers must put in proposals but with no budget. Tenderers are not even required to provide their own budgets or plans until three months after being appointed,” said Jansen.
The IWTMP is also unlikely to entice would-be investors into spending money on processing plants.
“The plan provides no comfort to would-be investors in processing plants, as they have to rely on the plan continuing to operate and supply them with tyres, even though the implementation will be subject to annual budget reviews,” said Jansen.
“Who will build a multi-million-rand processing plant when each year the budget could be changed by Treasury to deal with the crisis of the day?”
Another point of contention, Redisa maintains that the IWTMP includes overlapping responsibilities and duplication of effort, and attempts to divide the country into arbitrary regions regardless of the fact that where waste tyres arise, are stored, and are processed is not determined by any internal borders.
“For example, the area with the densest waste tyre arising would be central Gauteng, where land is most expensive. It may, and probably will, be better to site large depots and recycling plants in a different region,” said Jansen.
“How will implementers responsible for a geographic area work with each other, and how will they share targets? None of this had been addressed.”
Assuming the waste tyre levy has become an integral revenue generator for the DFFE to fulfil its public mandate, there is also a risk that the tax might be increased should the new IWTMP not be stopped in its tracks.
“Given that the plan makes no reference to any budget, it’s hard to say [whether the levy will be increased], but we do know that to deal effectively with all the waste tyres arising, and to chip away at the stockpiles, will take more money than the current amount being collected,” concluded Jansen.
The DFFE confirmed to MoneyWeb in September that it has received Redisa’s court application but that it will only provide comment once considering its merits.