The clean-up of a massive stockpile of tyres in northern Tasmania is underway but a long-term solution to the problem is still no closer.

A shredder is being used to reduce a pile of about 1.3 million used car tyres stockpiled at the state's only tyre recycling plant in Longford.

The Northern Midlands Council this week issued an environmental protection notice, revoking the plant's permit to store tyres after next March.

Mayor David Downie said the stockpile posed a fire and public safety risk but a long-term solution was yet to be found.

"We've had two fires in our municipality before," he said.

"The community and the council have had enough of stockpiling all the tyres that are produced in Tasmania and we're asking for the industry and the State Government to find a solution."

The council's decision has been criticised by Green Distillation Technologies, which announced plans in July to open an emissions-free recycling plant to process the tyres.

The plant would convert old tyres into carbon, oil and steel, which can be sold on.

CEO Craig Dunn said the $8.5 million proposal would not proceed if the council refused to allow tyres to be stored in Longford.

"Clearly, unless we get a written undertaking from the council that the tyre storage ban will be lifted, it would not make commercial sense for us to build the plant without long-term access to supply of end of life tyres," he said.

"We have been doing the preparation work for the development application for the plant, but this requires that we lodge a non-refundable fee of $25,000, which will be lost if we don't proceed.

"The council does not seem to understand that we are developing a world-first Australian technology that is complex to build and will take several years of production to provide a return on the investment."

Mobile shredder offers second solution

A mobile shredder has been brought in to tackle the Longford stockpile. ( ABC News: Damian McIntyre )

A second company, Tyrecycle believes its new mobile shredder offers a different solution.

The shredded tyres will be shipped to Melbourne, where they will be processed for sporting tracks, building insulation and brake pads.

CEO Jim Fairweather believes the company can eliminate the stockpile within four months, if it can secure funding.

"We're here to process about a quarter of this stockpile ... in the order of 3,000-3,500 tonnes, we'll have that job completed prior to Christmas," he said.

"This whole site could be cleared and all that is required for that to happen is for industry and government to come up with an appropriate funding model."

"You're probably looking in the vicinity of about $1.8–2 million to clean up the whole pile."

"New technologies and new process ... take time and they still take money. We have an operation set up, operating, ready to go that can provide a solution for this site."

Council wants solution 'sooner rather than later'

Mayor David Downie denied the council was backing Tyrecyle's plans but said it wanted to see a solution sooner rather than later.

"We're not in a position to say which one will get up, we've got one proposal actually doing something now and if others can get going, that's their good luck," he said.

"This is the first one that's actually created some activity.

"We will be promoting any solution that will lead to the exhaustion of the stockpile."

It is understood a third company is looking at building a plant near Avoca to recycle the tyres.

Call for Government decision

Tyrecycle called on the State Government to identify a long-term solution to the tyre waste, as a matter of urgency.

"We can see that being driven by two methods - one is increased regulation around stockpiling ... that will force the market to determine that they need to charge more to collect and recycle tyres in Tasmania," Mr Fairweather said.

"Or we can look at a levy model where the Government gets involved ... to make funds available for recyclers to collect and then process the tyres appropriately."

"We're looking to engage more strongly with the Government."

The operator of Longford's tyre recycling plant, Tim Chugg, hopes a solution will be found soon.

"I have had a temporary licence to store the tyres on the Longford site, which was until December 2016," he said.

"This has now been brought forward to March 2016."

"By revoking the permit, I will then have to clear the site by 2020 but no-one has explained to me what I am supposed to do with 1.3 million tyres."

"I only hope some wise heads prevail and come up with a solution before we reach a locked in stalemate position."