Cleanaway, Australia's largest garbage collector, said it could be forced to send some recyclable waste to landfills within a week if the local government did not agree to higher municipal fees, or to stop collecting garbage from three municipalities in Perth.
Australia's garbage collection companies are reported to have sold the vast majority of recyclable waste to waste dealers, who then resold the waste to overseas markets such as Indonesia, Malaysia, South Korea and China for re-manufacturing.
Until recently, China was Australia's largest buyer, buying six hundred thousand tons of waste a year.
However, to reduce pollution, China stopped importing 24 kinds of solid waste in January.
The decision led to a collapse in waste prices, with some garbage collectors, including Cleanaway, saying prices were down 70 to 80 percent, and sometimes they were forced to pay themselves to transport recyclable waste to landfills.
Toll stalemate puts garbage collection at risk
Cleanaway said its processing costs had risen 50 percent since September, so it was forced to negotiate new recovery costs.
The company has long charged the city about 20 yuan a tonne, but the actual cost of processing is more than three times higher, although the cost was offset by the previous record high scrap prices.
Since then, processing costs have jumped to about 120 yuan a tonne, while scrap prices have fallen by 50%.
David Williamson, the company's general manager for solid waste services in Western Australia, said they proposed to the city government to quadruple the handling fee to compensate for the increase in costs, because the current treatment costs are far less than the costs it pays.
Since February, Cleanaway has been in talks with government in 20 locations in Western Australia, but has failed to make progress with three of them.
"We are now facing a critical moment when we have to make a decision, either not to collect waste, not to process it, or to ship it directly to landfills," Williamson said.
"if they choose to ignore it, then we can't continue to make us pay a high price to provide this service to them and their city government."
He said several municipalities have reached new agreements on their cost recovery, but a significant number have yet to do so.
Residents "should share the cost of recovery"
Both New and Victoria government have provided millions of dollars in aid in the short term to support the recycling industry while easing city cost pressures.
So far, Western Australia's government has no plans to take similar measures. But Willianson said the measures were the first step in helping cities and garbage collection companies meet new Chinese standards.
Cleanaway collects household waste regularly, of which up to 18% are contaminated. This ratio must now be reduced to 0.5% before recyclable waste can be transported to China.
The city and residents must share some of the costs to keep their recyclable waste up to standard, Williamson said.
The cost of recycling has been rising, "he said." The biggest factor for cost growth is that they need to be clear from the collected waste. "
"this is the biggest factor, because of the serious pollution, China has done what they have to do," he said. "so it's also forcing us to recruit people on a large scale and dispose of garbage as well as possible. It's a difficult process."