15/02/2005 - 21:00

Recycler owes $4m

15/02/2005 - 21:00

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Municipal waste recycler the Recycling Company of Western Australia has gone into administration owing about $4 million to more than 100 creditors.

Recycler owes $4m

Municipal waste recycler the Recycling Company of Western Australia has gone into administration owing about $4 million to more than 100 creditors.

The company recycled rubbish for the Southern Metropolitan Regional Council, a duty the SMRC has now had to take on for its member councils.

Those member councils are the cities of Canning, Cockburn, Fremantle, Melville and Rockingham, and the towns of East Fremantle and Kwinana.

RCWA has a $500,000 claim against the SMRC relating to contamination of the waste it was handling on the council’s behalf.

That claim was in mediation at the time of RCWA being placed into administration and RCWA administrator and PPB partner Jeffrey Herbert said he still had to decide what would happen with it.

The company’s assets, which include plants at North Fremantle, Gnangara and Canning Vale, are likely to be sold.

RCWA director Stephen Drake-Brockman has blamed contamination in the material it was processing for the SMRC for its financial problems.

He said the material had been contaminated with plastic bags which had added enormously to RCWA’s costs.

Mr Drake-Brockman claimed the SMRC had written to its member councils last June telling them to put plastic materials into their recycling but had not discussed the matter with RCWA first.

“We’ve had to pick out plastic bags at every point in our plants,” he said. “Our labour costs went through the roof. We also incurred higher transport costs because of it.”

SMRC CEO Stuart McAll confirmed the council was in dispute with RCWA over the contamination claims.

“We believe we were meeting the allowances within the contract,” he said.

With RCWA out of action, Mr McCall said SMRC’s cost for processing recyclable waste had risen from $13 a tonne to $31/t.

He estimated the council would have to process about 19,000t of recyclable waste in the six months he expects the administration of RCWA to take.

Mr McAll said the council had been receiving help from other waste removable specialists, such as Kleenaway and Western Recyclers.

He said SMRC was baling its recyclable waste and selling it to customers in China and Hong Kong.

“The Recycling Company sold into a different market. We’re selling ours as a baled product while they were selling as a separated product, which drew a higher price,” Mr McAll said.

Mr Drake-Brockman said the SMRC had been drawing some income from sales of recycleable waste RCWA made.

“Once we get over a certain benchmark price, the regional council gets a percentage,” he said.

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