China’s import restrictions on recyclable materials have forced an Essex council to agree a £500,000 payment to contractor Biffa.
Epping Forest District Council entered a 10-year risk sharing contract valued at £30m with Biffa in 2014.
But China’s decision to bar most recyclable material imports has seen the price for paper slump from £100 to £5 a tonne during the past year, according to a report to councillors by acting chief executive Derek Macnab.
He added that the risk-sharing deal was one “not many councils had [and] so this council was achieving good value for money from this aspect of the contract, generating an income of £2.5m for the council over the first four years of the contract”, until the problems from China arose.
The report said Biffa had invested some £4.6m in its Edmonton MRF, where materials was processed for Epping Forest and other councils, to try to make the paper more saleable by improving its quality.
Epping Forest had Biffa’s figure independently verified by consultancy WYG Environmental.
Councillors noted that difficulties in exporting recycled materials to China had resulted in “significant capital and ongoing investments made by Biffa… to improve and enhance the quality of output materials”.
They said the council should pay £500,000 in recognition of this, agreed as £250,000 this year and £50,000 in each of the remaining five years of the contract.
Refusing Biffa’s request for money could either see the company end the contract or the materials landfilled, it said.