Scrap Tires The Recovery of Carbon Black and Fuel Oil Ray Riek COO, Delta Energy, LLC

Scrap Tire Availability - USA ref: 7/04 Rubber Manufacturers Association Report 290 million scrap tires generated in 2003 In “storage” Texas: 53 millionabatement stalled New York 40 millionabatement starting Colorado: 35 millionno abatement Michigan: 25 millionabatement starting Ohio: 25 millionabatement in progress Alabama: 20 millionabatement starting Connecticut 20 millionno abatement Total in USA: 275 million scrap tires (grossly underestimated) Unused scrap tires: 57 million per year (570 thousand tons) Underutilized: Fuel & Civil Engineering uses million per year (1860 thousand tons)

Scrap Tire Utilization One scrap tire is generated per year per person in the USA Similar expectation in all developed countries Approx. 80% of scrap tires generated annually are recovered Remainder is land-filled or dumped Current market for scrap tires in a shredded form (tire chips) Fuel (cement kilns, stationary power plants) – Btu value similar to coal Raw material for crumb rubber for finished products such as doormats Embankments, playground cover More shred is currently produced than is consumed Shred is therefore provided at a very low price Frequently given away because of the lack of market

Recovery of Raw Materials Many failed attempts over second-half 20 th century Incomplete process and product development Low commercial development experience Inability to develop customers before plant investment Poor funding Several efforts underway (driven by spike in fuel oil price) No historical success in bringing the recovered carbon black to market

Active Recovery Efforts Long list of failures and shuttered facilities Titan Technologies, Inc. - founded in 1990; Albuquerque, New Mexico Three plants in Asia are not believed to be operational due to poor economic conditions & competition for tires as a fuel source Titan claims to have six plants in planning or construction; four along the US-Mexico border, one in Texas, and one in Columbus Ohio. Status of these ventures is largely unknown and unverifiable Earthfirst Technologies, Inc. – founded in 1997; Mobile, Alabama Public Company: currently reports inability to sell the carbon black material recovered from their process Licenses technology – no known sales

Active Recovery Efforts Continued Carbon Recovery Corp., recently founded; West Berlin, New Jersey Microwave technology Batch Process Looking for funding KOUEI Industries, recently founded; Vancouver, BC, Canada Batch process Delta-Energy, LLC, founded 2000; Pittsburgh, Pennsylvania Demonstration facility Patented technology Qualified customers for recovered carbon black and oil Only known company to qualify carbon black for sale Looking for funding

Technology Employed Titan, EarthFirst, and Delta-Energy all employ a continuous reactor operating between degrees F. Batch processing leads to prohibitive capital requirements and product variability Catalyst use lowers operating temperatures and improves efficiency Most operators historically have been content to recover the oil and gas from pyrolysis of tires Borderline economics that have led to many bankrupted operations Newest entrants are developing technology that enables the direct recycle of recovered carbon black Low manufacturing cost enables competition with products produced from oil

A Continuous Operating Facility Courtesy: Delta-Energy, LLC Delta-Energy Demonstration Plant

Products From A Shredded Tire Courtesy: Delta-Energy, LLC Pounds D-E Black™ (Reinforcing material used in rubber products) 6.8 De-polymerized oil (1.1 gallon of oil generated per scrap tire) 8.5 Off-gas 1.4 Scrap (Balance after steel de-beading and shredding processes) 0.3 Total shredded tire17

Summary Technology has advanced sufficiently to enable economic recovery of commercially useful materials from scrap tires Several developers are in the process of funding first commercial operations and looking for viable investors and operators First commercial plants supplying products are expected to be in operation in 2006 Delta-Energy, LLC