By Cam Lucadou-Wells
Casey Council will shell out more than $500,000 to its recycling contractor due to China’s recycling import restrictions.
According to a council report, the council is varying the rebate it receives for recycled material under its seven-year contract with SKM Industries.
The terms have been kept confidential but will result in a $560,550 shortfall in expected income in 2017-18, the report states.
The defecit is expected to be offset by waste management savings, according to the report.
SKM argues the fixed-rate rebate level is unsustainable due to the Chinese government’s tighter contamination rules and import permits for recycled products.
“In the present climate it is not considered an advantage for Casey to terminate the contract and retender.
“It is highly unlikely that a more favourable tender will be submitted than the SKM offer and it is highly likely that termination would result in recyclables being sent to landfill for a period.”
The variation will apply from February-June 2018, with Casey officers requested to negotiate a further “cost-sharing” variation from 1 July.
The report states that the council will be taking advantage of a $13 million State Government rescue package to help renegotiate with recycling contractors.
SKM – as well as other major Victorian recyclers Visy Paper and Polytrade Recycling – are strongly reliant on the Chinese market, the report notes.
“It is understood that all three service providers are seeking variations from their respective councils.
“The proposal seems reasonable under the current circumstances and is required to ensure continued service.”
The variation comes soon after Casey Council declared its recycling operations were unaffected by the Chinese Government’s restrictions.
Casey waste and landfill manager Michael Jansen told Star News in February that “SKM already produces recyclable product to the higher standard now required by China, and is currently developing additional processing facilities with the latest sorting technology.”
The Municipal Association of Victoria says after that date, all Victorians face extra rate rises of between 1.1 and 2.5 per cent to cover recycling costs.
China is reportedly the largest importer of recyclable materials in the world.
Its ban on 24 categories of solid waste this year is believed to affect an annual average of 619,000 tonnes of material in Australia.
