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A major Australian recycling company says hundreds of  thousands of tonnes of recyclables are destined for landfill if it  collapses, warning of a "major crisis" if China stops recycling  Australian waste.


Key points:

  • In a submission to the Victorian Government, SKM Recycling said it needed more government support
  • It said 400,000 metric tonnes of waste could end up in landfill every year if the company folds
  • It called for more onshore recycling to prevent a "major crisis"

SKM Recycling, which is contracted to more than 30  Victorian councils, is facing liquidation as creditors claim they are  owed millions of dollars.

Logistics company Tasman has taken the recycler to court, claiming SKM owes it $3.35 million.

Its  action, which seeks to wind the company up due to insolvency, has been  joined by five other companies, which are all seeking hundreds of  thousands of dollars.

A 2017 fire at SKM's Coolaroo plant


A 2017 fire at SKM's Coolaroo plant led to a crackdown by the Environmental Protection Authority (EPA), and the temporary closure of two of its sites in February forced councils to send tonnes of waste into landfill.

SKM  has not responded to ABC requests for comment, but has now warned in a  submission to the Government there is the potential for an additional  400,000 metric tonnes of recyclables to be sent to landfill each year if  a major recycler like SKM ceases business.

The huge increase  would "impact on existing landfill capacity", the company said in a  submission to the state's parliamentary inquiry into recycling and waste  management.

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I said there was "market volatility" affecting recyclers, and it blamed the Government for an uncertain regulatory framework.

"The  recyclers effectively have 100 per cent responsibility and  accountability for the system which is not a fair or accurate reflection  on how the industry is overseen and regulated," the submission said.

"If  the Victorian Government believes that an effective recycling system is  critical to the Victorian community, then financial, regulatory and  education support needs to be provided to the industry."

Treasurer Tim Pallas hit back at SKM, saying they had a business model that "doesn't appear to be particularly robust".

He  ruled out bailing out the company if it did go under, and said the  industry would ultimately adjust to losing it from the market.

"We've  consistently said that if they don't smarten up their act, then  ultimately people should seriously consider whether or not this is an  appropriate repository of these materials," he said.

Court  documents show the company could have a lifeline after it signed a  "highly confidential and commercially sensitive" term sheet with a  proposed purchaser on June 28.

The documents show SKM is fighting the action and is arguing it will be able to pay its debts "within a reasonable time".




China-US trade war threatens industry: SKM

The submission  said SKM supports up to 600 jobs across Australia through direct  employment and its supply chain, with most of those in Victoria.

It  flagged ongoing uncertainty with China's apparent plans to stop  importing solid waste by the end of next year and said the industry was  left shouldering the risk.

In January 2018, China banned the importation of 24 types of recyclable materials, sparking warnings it could be the end of kerbside recycling.

"If China [determines] not to accept any product in the future, this will be a major crisis," the submission said.

"This issue is further complicated by the trade war currently threatened between USA and China."



Please keep recycling,' council urges

The submission pushed  for Victoria to work towards "a form of circular economy in Australia",  which would depend on the capacity to create "economically viable  markets for recyclable products".

The company said new, local pulp  mills could be part of the solution to the state's recycling crisis,  but only if commercial conditions supported it.

Unless there was  better education for householders about what could and could not go into  recycling bins, councils would face increased costs for the  contaminants to be removed on-site, the submission said.

The  Deputy Lord Mayor of the City of Melbourne, which recycles waste through  SKM, said recyclables going to landfill was a "worst-case scenario".

Arron Wood said governments were working on solutions.

"Critically at this time, we just want to send the message that: please keep recycling," he said.

The  state Labor Government yesterday announced a new paper recycling  facility would be opened in Melbourne's west to process 39,000 tonnes of  paper a year.

The EPA recently allowed SKM to keep accepting  recyclables at its Laverton North facility and found its Coolaroo  facility was compliant after earlier stockpiling fears.





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