The £100m facility in Sunderland would produce sustainable aviation fuel (SAF) for the International Airlines Group (IAG) which owns British Airways.

Wastefront, which will operate the plant in the city’s port, said about 10 million tyres would be processed each year.

Construction work has now begun with the company planning to open the first phase of the site by the end of 2026 and be fully operational a year later.

Norwegian-firm Wastefront said it would also be the UK’s first “fully circular tyre-to-fuel plant” as it is able to refine used tyres into oil, and then SAF, on Wearside.

IAG announced its investment in the facility in January, with ground-breaking construction work beginning on Friday.

“The Sunderland facility is just the beginning, we aim to expand rapidly to meet the growing demand for sustainable fuels,” Vianney Valès, chief executive of Wastefront, said.

He said the new site would create more than 100 jobs and would not just “prevent millions of tyres from being discarded in landfill” butalso provide a “scalable, cost-effective pathway for SAF production”.

Michael Mordey, leader of Sunderland City Council, said the beginning of construction work marked the start of the port’s “growing deserved reputation”.

He said: “We’re proud that this has captured the attention of Wastefront.”

On 1 January, the government introduced a mandate requiring all flights departing UK airports to use SAF for at least 2% of their fuel, increasing to 10% in 2030 and 22% in 2034.

IAG, which also operates airlines including Aer Lingus and Iberia, said the “much-needed” Wearside factory would help the company meet the demand.