My Kingdom for a Tire

The commodities frenzy has led to a shortage of giant tires—and boom times for a niche business

Most of the used tires that turn up are too battered to retread Brownie Harris

by Brian Hindo

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The retreading process is labor-intensive and hard to automate Brownie Harris

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On the plant floor at RDH Tire & Retread in Cleveland, N.C., about 60 workers do nothing all day but retread giant tires that have come off of mining equipment—giant meaning 12 feet tall, 40 feet around, and 13,000 pounds. A tire retreading shop is fairly quiet as factory settings go. You'll hear lots of dull thuds as hammers whack away at the vulcanized rubber that makes up most of the tire. There's an occasional whoosh of an air hose sweeping away debris and dust. Now and then, high-pitched whines pierce the air as workers grind broken bits of metal that make up the tire's interior radial belt.

What's more remarkable are the smells. Before a new tread is put on a tire, the old, worn-down one has to be buffed off. As that happens, each tire gives off its own olfactory signature, depending largely on the job it used to do. On a recent winter day at RDH, a 10-foot-tall tire, caked in white limestone after half a year in a Florida quarry, rotated on the spindle of a giant buffing machine like a fat LP on a turntable. As bits of rubber from the shaved tread flew, the smell was sweet, almost like ginger. Then it turned pungent. "What you're smelling is burning rubber," says Wilhelm Brau, general manager at RDH.

Normally, retreading these giant tires is the slenderest of niche businesses. It's an industry made up of a handful of small shops that earn a living by performing a service the big tire manufacturers disdain. But as the demand for raw materials exploded over the past five years and the pace of mining production picked up dramatically, miners began to wear through tires faster than new ones could be made. By 2005 the world was looking at an acute shortage.

FRANTIC SEARCH

In one of the more unusual ripple effects of high prices for commodities such as copper, gold, iron, and, of course, oil, used tires that can be retreaded or repaired have become a sort of precious raw material in their own right. Over the past three years, a varied set of players, from multinational mining powerhouses to freelancing ex-tire salesmen, have been scouring the globe in a frenzied search for used tires. At the height of the shortage, in the summer of 2005, "off the road," or OTR, tires—as they're called in the industry—were being offered for upwards of $180,000 on online exchanges.

With the OTR tire shortage projected to persist through at least 2011, much of the mining industry—from global materials powerhouses such as BHP Billiton (BHP) to cement maker Lafarge (LFRGY) on down to regional strip miners—have relied on retreaders to pick up the slack. The tire supply is so tight that Rio Tinto (RTP), one of the biggest miners in the world, opened its own retreading facility in Perth, Australia, in February, 2007. It handles about 1,000 tires a year.

Rio Tinto has little choice if it wants to keep its mines humming. There are few sorrier sights to a miner than a $6 million, 400-ton hauler sitting idle on blocks simply because there aren't any tires to put on it. A single hauler can carry millions of dollars of raw material out of a mine over the course of a year, says RDH's Brau, who saw several such sidelined machines on a visit last spring to the Canadian tar sands (he declines to name the client). This January, Harvey Brodsky, who runs an industry group called the Tire Retread Information Bureau in Pacific Grove, Calif., got a frantic call from a miner in Nigeria who couldn't ferry diamonds for lack of truck tires. "I'll pay anything," he pleaded.

Few companies have the capability to retread giant tires. The ones that do can rehab a spent tire shell, called a casing, in two weeks' time, giving the tire a second or third life. Prices have risen, but retreads still cost about half the price of a new tire and last about 80% as long. As the commodities boom reverberated through obscure corners of the economy, retreaders saw their business explode.