GOTHENBURG, Sweden—Recycled carbon black company Enviro Systems Inc. and Chinese state-owned Vanlead Group have signed a memorandum of understanding to set up a turnkey recycling plant in southern China.

Construction of the new facility, which will have 30,000 metric ton per year capcity, is set to start later this year in Guangdong, the city where Vanlead is based, according to Enviro. The facility will supply Vanlead's production units throughout China.

Many project details have not been released as they are subject to further negotiations. However, Enviro CEO Thomas Soerensson noted that "the plant will follow the basic design that we developed with (Swedish engineering group) AF and that is now ready."

Vanlead, according to Soerensson, wants to "use Enviro's reclaimed carbon black material in its tire production on a massive scale" and he believes this partnership is only the beginning of a larger trend.

"China is the world's largest market for tires, rubber, and carbon black," Soerensson said. "There is great awareness that raw materials are limited, and state-owned Vanlead is the first to exhibit this high level of ambition."

Guangdong-based Vanlead the "largest" tire making group in south China, according to Enviro. The company goes to market with the Wanli Tire and Diamond Tire brands.