China’s ban on waste imports has hit the region after recycling giant Polytrade informed the industry this month that its Gateshead recycling plant was operating on a “week-by-week basis”.

In a letter to Solo Resource Recovery, that operates recycling trucks in the Hunter, Polytrade’s Colin Tsang said “urgent assistance” was needed to “prevent imminent service interruption”.

“Urgent major changes are required to current collection and processing systems and pricing structures to prevent the collapse of kerbside recycling collection,” Mr Tsang said.

He went further to say the company required a “contract variation” and there was an “urgent need for new offsite storage facilities”.

Several councils in Victoria have already had recycling contracts cut off and some have been forced to tell residents not to use their yellow bins.

Lake Macquarie City Council’s director city strategy Tony Farrell confirmed it had started “short-term” stockpiling recyclables.

“Council is committed to resource recovery, and does not intend to send recyclate to landfill,” Mr Farrell said.

“We are currently storing excess material and have solutions to allow that to continue until our long-term market development plans can be implemented.”

More than 61,000 tonnes on recyclables are collected in the Hunter each year from 263,000 homes. The Hunter previously exported the vast majority of its recycling to China, where it was processed and used to fuel China’s factories. 

From January 1, China stopped accepting certain plastics and mixed paper waste and will only accept cardboard less than 0.5 per cent contaminated by other materials, as part of an environmental drive outlined by President Xi Jinping.

The end of the Chinese market has left local recycling businesses with limited affordable options to recycle and authorities scrambling for solutions.

Mr Tsang said without “secondary processing”, which the industry is not equipped for, recyclables could not be sold. 

Waste Contractors and Recyclers Association of NSW executive director Tony Khoury said collection contractors would only survive with an injection of “additional funding”.

Mr Khoury said demand for recyclables was at an “all-time low” and it would take time for contractors and authorities to find alternative markets.

“The bottom line is that collection contractors need to have recycling outlets for the product,” he said.

“If the material cannot be recycled, then it will either need to be safely stored or disposed of at landfill.”

The problem is further compounded in NSW by an EPA waste levy of $138 per tonne, in metropolitan areas, or $79.60, in regional areas, applied to recycled waste stored for more than a year.

Councils are calling for the levy to be waived to give the recycling industry time to identify a solution to the problem. An EPA spokeswoman declined to answer if the watchdog would remove the charge.

She said the EPA was working with contractors and councils to identify solutions and the NSW government had committed more than $800 million over nine years through the Waste Less, Recycle More program.

Industry insiders said the cost of picking up bins was now such a “loss-making exercise” it appeared “very likely” that residents would be forced to pay more for their waste collection.

There are fears councils could be forced to increase fees to residents to keep the kerbside recycling system operating.

The domestic waste management charge is set by councils each year on a cost recovery basis. While the charge appears on rate notices, it is a separate cost and not subject to rate capping set by the Independent Pricing and Regulator Tribunal.

Some analysts predict the cost of kerbside collection could rise by $60 per household, because contractors would need to invest additional time and resources to ensure material sent for recycling meets China’s strict new rules.

Local Government NSW president, Cr Linda Scott, said while the ban had “very real implications for council kerbside collections and recycling”, any increased cost had not been determined.

“Ultimately, we need statewide waste reduction and recycling strategies that will lower the cost to councils, and therefore communities, for the collection of waste and to get the right environment results,” she said.

A Newcastle City Council spokesman said there was no immediate threat to the collection of yellow-bin recyclables in the local government area and council had the capacity to continue waste collection without a contractor.

He said council was working with its contractor, Solo, to understand the “pressure it’s experiencing”, but expected the company to honour its contract.

“Council owns one of the largest landfill facilities in NSW with enough capacity to last the city several hundred years,” he said. 

“As a result, we stand ready to support other councils should they ultimately find themselves in a position where their kerbside recycling services are adversely affected by China’s new minimum recycling standards.”

Hunter Joint Organisation of Councils chief executive Roger Stephan said councils pay a rate per tonne to contractors for the collection and processing of recyclables.

“Waste services are currently and will remain a significant component of a council’s annual budgets,” he said.

“The collection and processing of recyclate can account for as much as 10 per cent of a council’s annual expenditure.”

Mr Stephan said collection of bins would continue regardless of the end location of the product. He described sending recyclables to landfill as “not appropriate”.

There are fears that the recycling crisis could undo decades of training residents to sort out and prioritise recyclable materials.

NSW households generated more than 3.69 million tonnes of domestic waste in 2014-15, sending 1.92 million tonnes to landfill, with the remaining 1.77 million tonnes recycled.

Polytrade and Solo did not respond to requests for comment.