The circular economy company Ragn-Sells is frustrated that a years-long planned partnership with the state-owned company Enefit has fallen apart. In 2022, Ragn-Sells and Enefit Industry — then known as Enefit Power — signed a five-year cooperation agreement to begin shredding old tires and adding the material to shale oil production.

According to Ragn-Sells board chair Kai Realo, Enefit concealed the fact that it lacked the permits necessary for using shredded tires in pyrolysis.

"At this point, in relation to the criminal complaint to the Prosecutor's Office, we've reviewed all communication and information that Enefit should have been aware of even back when we at Ragn-Sells were just beginning to make our investment. Even if they entered into the agreement with a so-called hope and expectation that everything would work out, our preparations to develop and build our technology still took time," Realo said.

"If they had been open with us, we could have avoided making the €3.5 million investment — nearly €4 million when you include all the additional work. We would have been very satisfied if we had received accurate information at the point when we still could have pulled back from this major investment," she added.

The partnership between the companies began in 2019, and the agreement was signed in 2022. In the spring of last year, Ragn-Sells used a €3.5 million tire-shredding line to produce its first batches of tire chips.

However, Enefit refused to accept them, Realo said. She noted that it wasn't until a face-to-face meeting last fall that it became clear the necessary permits and certifications weren't in place. Realo said that Ragn-Sells submitted a criminal complaint to the Prosecutor's Office just over a week ago, on July 25. She added that, from their side, the cooperation agreement is now terminated.

Enefit Industry CEO Lauri Karp said that, in their view, the agreement remains in force.

"We are still interested in continuing with the tire chip project. From our perspective, there has been no breach of contract and we are proceeding accordingly. We've launched a test program for co-pyrolyzing oil shale and tire chips, which has also been approved by the Environmental Board. The permits are in place," Karp said.

Realo was unaware that Enefit had obtained the permits this summer and cited it as yet another example of poor communication.

Last fall also saw a change in leadership at Enefit Industry. Unlike the previous team, the new board is focused on safety and environmental concerns, Karp noted.

As for why the previous management hid the lack of permits from Ragn-Sells, Karp said that question should be directed to them. "I can't answer why the previous board failed to disclose certain things or should have done so. I'm not looking for conflict in business — there are successes and also failures or misalignments and all of those can be resolved through negotiation. We are in the implementation phase and see no reason why we can't move forward successfully with this project. From our side, the door is open," he said.

According to Ragn-Sells CEO Kai Realo, it's difficult to cooperate with a partner when you're trying to communicate constructively but instead are met with blame.

"From a human standpoint, I feel real reluctance to work with people like that. But of course, from a business perspective — if I have to set emotions aside — then, as they say, we'll see what's on offer," she said.

Realo also pointed out that the recycling organization Estonian Tire Recycling has been caught up in the issue as well. It is responsible for ensuring that tires imported into the country are in fact recycled.

"We began collecting tires at various waste stations well in advance so they could be shredded. If oil production had started, the recycling organization would have been able to obtain certification confirming the tires had been reused," Realo explained.

As of now, Ragn-Sells has delivered two loads — 873 tons — of shredded tires to Enefit, Realo said. No oil has yet been produced from them.

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