top of page

NEGEV FACTORY: KEY FACTS

WHY ISRAEL?

Israel is a leader in innovation in a variety of sectors. Popularly known as “Start-Up Nation,” Israel invests heavily in education and scientific research. Israel has 117 companies listed on the NASDAQ, the fourth most companies after the United States, Canada, and China. Israeli government agencies, fund incubators for early-stage technology start-ups, and Israel provides extensive support for new ideas and technologies while also seeking to develop traditional industries

KEY LOCATION DRIVERS

  • Established optimal supply chain of tyre chips by cooperation with KMM Recycling Industries Ltd., (Gam Yam Negev Advanced Technologies Park, Beer Sheva), the largest tyre coolecting and utilizing facility in Israel ​

  • BP Negev plant is projected in Mishor Rotem Industrial Zone, designated as Priority Area "A" with significant tax benefits and government stimulation.​

  • Neighboor distance (120 km) to Ashdod port, the biggest in the region full services sea port. 

BPrCB FACTORY PRODUCTION CHART

Factory Chart.png

FINANCIAL PROJECTIONS

SUMMARY

Black Pearl has created an eco-friendly method for recovering ELT (End-of-Life Tires). The gas produced is used to run the factory, and the valuable recycled carbon black (rCB) and pyrolysis oil (POil) are sold in the market. This process allows materials to be repurposed into new products, aiding customers in achieving their sustainability goals while decreasing their reliance on fossil resources.

The calculation based on Israeli conditions requires financing of approximately EUR 2.2 million, which includes factory equipment, construction, installation, and more. However, this investment is anticipated to decrease for future factories by reusing the detailed design and achieving increased purchasing power through repeat purchases and growth volumes.

The financials solely reflected the operations of the Israeli Negev factory. The company's profit and asset growth from the extensive international expansion plan were excluded. The financial model presented below demonstrated an excellent profit margin. Naturally, the margin may fluctuate due to factors including the market prices of recovered carbon black, the cost of raw materials, energy prices, payroll expenses, and so forth, but will typically remain highly attractive.

PROJECT INPUT DATA

  • The financial model below has been calculated for a factory recycling 5,300 tonnes per year of End-of-Life tyres, resulting in the export of approximately 1,800 MT of rCB and nearly 2,450 MT of pyrolysis oil.

  • Costs included additives and reagents as a significant component of the Black Pearl process. Overall, our study indicates that the "additives basket" cost is regarded as being approximately equal to the vCB price.

  • The tyre importer utilization compensation is considered as EUR 170/MT of ELT, cost of collecting is assumed as EUR 85/MT.

  • The establishment period is anticipated to be around 22 months.
  • The Factory is anticipated to be acknowledged as a “preferred enterprise” and entitled to a reduced tax rate of 7.5%.
  • Due to a closed circuit, water is only required to compensate for natural losses and to meet fire protection regulations.
KEY MARKET DATA (Q1'2025)
ITEM
VALUE

Virgin Carbon Black (EUR/MT, EU)

1,248

Recovered Carbon Black Discount

30%

Recovered Carbon Black FOB Asdod port, (EUR/MT)

816

Pyrolysis Oil price FOB Asdod port (EUR/MT)

629

Steel scrap DDP BP Plant (EUR/MT)

287

CAPITAL INVESTMENT REQUIREMENTS
ASSET CATEGORY
AMOUNT (€000s)

Equipment

752

Site design & development

220

Construction

717

R&D, Marketing, Legal

178

Cash reserve

350

Total Assets

2,217

FINANCING STRUCTURE
SOURCE
AMOUNT (€000s)

Share Capital (1,000,000 shares)

1,500

Shareholder Loan

1,467

Total Financing

2,317

PRODUCTION CAPACITY
ITEM
AMOUNT (MT)

ELT Tires Factory Recycling Capacity

5,300

ELT Chips Supply

4,505

rCB production

1,807

pOil production

2,451

REVENUE GROWTH (€000S)

  • Year 2: €2,716

  • Year 5: €3,059

  • Year 10: €3,730

  • CAGR: ~ 4.2%

CASH FLOW AND DEBT REPAYMENT

  • Debt fully repaid by year 4

  • Dividend payout of 40% in year 2, increasing to 60% in years 3-4, and 95% from year 5 onwards

  • Positive operating cash flow from year 2 onwards

KEY FINANCIAL ASSUMPTIONS

  • Revenue Growth: 4.4% for rCB and 3.7% for Pyrolysis Oil

  • Electricity price growth: 2.5% annually

  • Water price growth: 4.5% annually

  • Payroll growth: 2.5% annually

  • Depreciation: 10% of opening PP&E balance

  • CapEx: 3-7% of opening PP&E balance

  • Debt interest rate: 6%

  • Tax rate: 7.5% of Earnings Before Tax

  • DSO/DIO/DPO: 60 days each

  • SG&A Staff: 3 employees

  • Production Staff: 20 employees (2 shifts with 10 persons/shift)

RISK FACTORS AND MITIGATION

  1. Market Price Volatility: Diversified product mix (rCB and pOil) helps mitigate impact

  2. Input Cost Inflation: Long-term contracts for ELT chips supply

  3. Technology Risk: R&D investment and equipment maintenance program

  4. Financing Risk: Conservative debt structure with full repayment by year 4

INVESTMENT HIGHLIGHTS

  1. Strong Profitability: ~45% EBITDA margins

  2. Rapid Debt Repayment: Full debt clearance by year 4

  3. Attractive Dividends: Up to 95% payout ratio from year 5

  4. Environmental Benefits: Sustainable recycling of end-of-life tires

  5. Scalable Model: Potential for capacity expansion in future phases

IMPORTANT NOTES
  • The current Financial Plan does not include any grants or other forms of governmental support, despite the undoubtedly high chances of obtaining it, except for the 7.5% tax regime.
  • The current report reflected only the operations of the Israeli factory. The company’s profits and asset growth resulting from its extensive expansion plan were not included. Additional earnings from the increased capacity of the pilot factory, as well as other services, licence sales, and partial or full ownership of other factories, were omitted from the projections below.
GOVERNMENT INSENTIVES BRIEF

​TAX BENEFITS

  • Corporate Tax Exemption: Companies can benefit from a full exemption on corporate tax for up to 10 years on undistributed profits, provided they meet the criteria for Approved or Benefitted Enterprises under the Encouragement of Capital Investments Law.

  • Reduced Tax Rates for Exporting Companies: Industrial companies that export more than 25% of their turnover to large markets may qualify for a reduced corporate tax rate of 7.5%.

 

​GRANTS AND FINANCIAL INCENTIVES

  • Capital Investment Grants: Eligible companies can receive non-repayable cash grants covering up to 30% of approved investment costs for establishing or expanding manufacturing facilities

  • .Employment Grants: Grants are available to support the hiring of new employees, typically covering 20% of salary costs

  • .R&D Support: Companies engaged in research and development may receive grants covering up to 50% of approved R&D expenses.

 

​ADDITIONAL BENEFITS

  • Land and Infrastructure Support: Businesses in Mishor Rotem may benefit from discounted land prices and support for infrastructure development.•

  • Community and Networking Opportunities: The industrial park fosters a collaborative environment, encouraging partnerships and information sharing among resident companies.

© 2025 by Black Pearl

bottom of page