But Dr Smith said although no decision was made yet on a new scheme for old tyres, claims the project was canned were "just plain wrong."
He said a report from his ministry was due next month. The ministry would possibly recommend keeping the stewardship scheme, which included a tyre recycling initiative.
Dr Smith said he was "open-minded" and would make a decision on what to do with the mountain of old tyres after he got the report.
The minister said globally, the situation was so bad, industries in some countries were "desperate" to find any way to use rubber from tyres.
Dr Smith said he was "not satisfied" New Zealand had the best way of managing old tyres.
"The metal in them can easily be recycled through the broader metals recycling industry. But the rubber is a problem."
He said foreign artificial turf manufacturers who used recycled tyres were undercutting local companies.
He said he visited an aggrieved local business using rubber to make artificial grass for sports venues.
"Their problem was that the compulsory-type schemes for rubber recycling in Europe had meant that the New Zealand artificial turf industry was being flooded with product...severely undermining their business."
Dr Smith said one ongoing local project involved looking at including the rubber in asphalt. Dr Smith said a similar project in Australia was working well.
A Herald reader pointed out that in Israel, recycled tyres were already widely used in roads.
"Paving roads with a recycled tire compound costs no more than conventional methods and lasts longer, too," the Israel21C website reported.
Recycled tires were also being used in roads in Arizona and Texas, the site added.
