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Council to tender MRF contract after Biffa deal ends

Coventry City Council has been warned that the closure of Asian markets to recyclate imports will see costs increase for its next MRF contract, after the current deal Biffa draws to a close

The council has an MRF provided by Biffa and bulking and transport of the waste to it by Tom White Waste. These contracts were let in 2009 and all extensions have been exhausted.

A report to Coventry’s cabinet said the council should carry out a tender exercise ahead of the contacts’ end in September.

It said: “Since the original contract was let in 2009, the commodities markets for recyclate materials have changed significantly, with increased volatility in recent years.”

The report said other councils seeking new MRF deals reported “little market appetite” and one nearby had had no bidders, forcing it to pay a spot gate fee of £70 per tonne, described as “significantly higher” than Coventry’s current fee.

“Conversations with the wider marketplace at the time of [the 2017] extension and following the restrictions in the Far East commodity market indicated that going out to the market at that stage would not have resulted in a significantly better deal,” the report said.

Further talks with the market now showed waste companies “would be interested in Coventry’s materials, on a risk share basis, similar to the arrangements Coventry has with Biffa”.

“Industry providers indicated that any pricing mechanism would be subject to market fluctuations, with no appetite for a fixed gate fee or ceiling price,” the report added.

Figures from WRAP showed the median processing gate fee paid by local authorities to MRFs increased by 47% in 2017-18, with fees in the West Midlands ranging between £56-£86.

Coventry’s fee to Biffa is “within this range and prices indicated by the market for any short-term arrangement was in the region of £90”, the report said.

 

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