Saskatoon company, chamber demand answers and changes after tire recycling deal

Saskatchewan's environment minister says she will look at concerns raised by the CEO of the Saskatoon Chamber of Commerce and a Saskatoon company about a contract to recycle tires that was awarded in 2022.

The Saskatoon company, Shercom Industries, said Tuesday that "misinformation" continues to spread regarding a decision to award a contract for tire recycling to a California-based company. When asked what specific misinformation has been circulated, Shercom president and co-founder Shane Olson said "there has been a plethora."

Shercom Industries, a tire processor with more than 30 years of experience in Saskatoon, had solely handled tire recycling in Saskatchewan before Tire Stewardship of Saskatchewan (TSS) decided to split that recycling into two contracts, one each for northern and southern Saskatchewan. TSS is a non-profit corporation established in 2017 that oversees tire recycling operations in the province, with oversight from the Ministry of Environment.

In late 2022, after a request for proposals (RFP) process, TSS signed a contract with California-based Crumb Rubber Manufacturers (CRM) to handle tire recycling in southern Saskatchewan out of a facility in Moose Jaw.

A separate RFP for the northern part of the province closed in January of 2024. The successful bid has not been announced, but Shercom did not bid.

Olson said there was no need or business case to split the province and that the model is doomed. He said B.C. and Manitoba only have one processor each, and that attempts in Saskatchewan to split operations between companies have ended in bankruptcies in the past.

"There's not any room for two processors," he said.

Olson said that during contract renewal negotiations at the end of 2020, Shercom told TSS it wanted three things: a voice in the future of the industry, assurance of tire supply and an increase in its tipping fee, which had not been increased since 2012. Instead of an increase in the tipping fee, TSS offered Shercom a 30 per cent decrease, Olson said.

TSS released a statement Tuesday afternoon acknowledging that it had been unable to come to a contract agreement with Shercom.

"Terms offered by TSS were unacceptable to Shercom, and conditions required by Shercom were unacceptable to TSS," the statement said.

Olson said the RFP for southern Saskatchewan "excluded" Shercom based on its language.

"We raised legitimate concerns with the TSS and with the ministry, and they basically shoved it through and had this contract signed behind closed doors."

TSS denied this accusation in its statement, calling its process "fair and transparent."

"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," it said.

Shercom said 60 jobs were lost, but it has since hired some back due to an increase in its manufacturing side of the business.

Saskatoon Chamber sends recommendations to province

On Monday, Saskatoon Chamber of Commerce CEO Jason Aebig sent a letter to Environment Minister Christine Tell.

"Questions continue to surface around the short-sighted decisions taken by TSS to regulate a once 'free market' for tire processing in Saskatchewan and undermine the operation of Saskatoon-based processor Shercom Industries," Aebig said.

Aebig thanked Premier Scott Moe and former environment minister Dana Skoropad for responding to concerns raised by the chamber in 2023. Moe tasked former deputy minister to the premier Cam Swan with reviewing TSS's procurement practices and the future of tire recycling.

Swan made three recommendations, including strengthening TSS procurement practices through SaskBuilds and ensuring environmental goals are met.

Aebig said "wider issues" exist with TSS. He said TSS is missing the mandate set out by the Ministry of Environment, which says it must "bring the most benefit for Saskatchewan consumers and businesses."

"TSS has clearly failed to meet this expectation. Changes need to be made," Aebig said.

Aebig called on the government to:

• Guarantee supply of scrap tires to processors to inform their business plans, expansions, and investments in jobs and equipment.

• Change the composition of the TSS board.

• Release a market feasibility study done by TSS.

Tell says government will listen to concerns

Minister Tell told reporters on Tuesday that the government would look at Aebig's letter, along with the other concerns and recommendations raised in recent months.

"Government should never shy away from making regulatory, statutory, legislative changes when they are necessary. We're going to take it all in, looking at Cam's report, looking at Jason's letter, what Shercom has said. All of it will be taken into consideration and we'll do what we need to do."

Tell said Aebig's request to release the market feasibility study was not hers to fulfil, but up to TSS. She said the government would not release Swan's report either.

Tell said the government's role is ensuring tires are recycled and processed "in an appropriate way."

"That is happening today."

She said she is hopeful the successful northern contract bidder will create jobs "just like Moose Jaw has done."

Opposition NDP raises RFP, role of lobbyist in tire contract

Opposition NDP MLA Meara Conway has raised the Shercom and TSS issue in question period over the last two weeks.

Conway asked about the role former Saskatchewan Party finance minister Kevin Doherty played as a lobbyist for CRM.

Minister of Environment Christine Tell said last week that Doherty did not lobby her or the former minister on the TSS deal with CRM. Tell said that, to her knowledge, Doherty was hired after the contract was awarded.

TSS CEO Stevyn Arnt told CBC last week that TSS issued the RFP in early 2021, but didn't finalize the contract until summer 2022.

"We didn't go forward with the press release on that until December of 2022," he said.

"There was no lobbying efforts at all that took place throughout that process. so I'm not actually sure where this question came from."

Last year, Arnt said the decision to split recycling into regions would save freight costs on shipping tires from the south to Saskatoon and reduce greenhouse gas emissions.

"CRM was one of the couple of companies that expressed interest and we chose them."

Arnt said no Saskatchewan-based company elected to participate in the RFP process. Arnt said companies that bid on the northern contract said they did not need to receive 100 per cent of the tires available to "run a profitable business."