Cleanaway, Australia’s largest waste collector, announced that it could send some recyclables to landfill or even halt with the collection of kerbside bins in three metropolitan councils within a week if the local government do not agree to settling higher fees.

Waste collectors in the country actually sell majority of their recyclables to commodity traders who go on to on-sell to foreign markets such as Indonesia and Malaysia for re-manufacturing. Until recently, China was actually Australia’s biggest buyer, getting 600,000 tonnes of material per year. However, China has just recently ceased importing 24 categories of solid waste to lessen pollution.

That move impacted waste commodity prices, causing them to plunge, with some collectors reporting a drop of up to 80% in price and in some situations, they are being forced to pay up just for the recyclables to be hauled away.

Fee impasse puts bin collection at risk

Cleanaway said its processing expenses have soared by as much as 50% since September, which is why they don’t have any choice but to negotiate new recycling charges.

The company has charged councils around $20 a tonne despite the actual cost of processing being over than three times higher, because the commodity’s traditionally high value had offered a subsidy. Those processing costs have since surged to around $120 a tonne while at the same time, the value of the commodity has dipped by half.

David Williamson, the firm’s Solid Waste Services general manager said Cleanaway had recommended a four-fold increase in processing fees to take up the cost increase, which it claims is still far less than what it was paying.

Cleanaway has been in talks with 20 local governments all over the state since February, but said it had not gained much traction with three of them.

“We’re right at the tipping point of having to make a decision to either in some instances, not collect the bins, or not process or divert to landfill,” said Williamson.

“If they choose not to engage then we can’t continue to have these exorbitant costs imposed on us to deliver that service to them and their councils.”

Williamson relayed that a handful of councils had consented on updated terms for their recycling costs, but a substantial number were yet to do so.

“There’s a big bunch in the middle we’re still working with in a positive light, but then there’s three or four that are choosing not to work with us at all,” he said.

For business reasons, the company did not name the councils it claimed were not keen on negotiating, but disclosed the three collectively made up between 20 and 30% of Cleanaway’s overall collection.

Ratepayers “should share recycling cost”

The New South Wales and Victorian governments have both offered multi-million-dollar rescue packages to aid the industry for the meanwhile, and to ease cost pressures on councils.

So far, the WA Government has dashed out identical packages, but Williamson said he considered it was an essential first step to aidiang councils and waste collectors meet China’s new standards.

Cleanaway consistently gathers household waste, which is up to 18% contaminated. It now has to be lowered to 0.5% before it can be sent to China.

Williamson said councils and ratepayers had to share some of the burden of the costs of bringing their recyclables up to standard.

“The cost of recycling is going up,” he said. “It’s quite significant in percentage terms in terms of processing, but in terms of the overall cost of waste and recycling management it’s quite minor. We’re talking something like less than 10 per cent for most councils. And if you extrapolate that out to what it would mean for a resident, it would be two or three per cent to their annual rates.”

Williamson said the most important factor in the cost hike was the need to take away contaminated material from the collected waste.

“That’s really the biggest driver here, (and) China have done what they did because of high levels of contamination,” he said. “So that’s forcing us to employ a lot more people and pull that material out the best we can and as difficult as that is.

“The contamination going into the bin actually causes damage, we’re getting items that aren’t supposed to be there and then you’ve got the storage element as well. We’re at our maximum capacity of what we can store here, it’s much harder to move products in the current climate,” Williamson explained.