The deal, which begins immediately, will see the Milton Keynes-based company building two 75,000 tonne-a-year capacity mechanical biological treatment (MBT) facilities to treat the county's residual household waste, as well as take over the management of the county's household waste recycling centres.
Shanks has said that the solid recovered fuel (SRF) produced by the MBT process could be used by local industries to reduce their reliance on fossil fuels, as well as being dealt with via the contracts it already has in place with cement kilns.
Following the announcement, Cumbria county council's head of waste management, Graham Harrison, said: “I'm delighted we've now reached financial close. This contract will truly revolutionise waste disposal in Cumbria by slashing the amount of rubbish sent to landfill and providing the county with a greener, more cost-effective system for dealing with waste.
“As well as having major environmental benefits by reducing the amount of methane produced by rotting rubbish, the contract will also ensure Cumbria avoids increasingly expensive penalties and landfill taxes that we would face if we continued to landfill.
“We are looking forward to working with Shanks over the coming years to deliver this new waste disposal service for Cumbria,” he added.
The council and Shanks had hoped the begin the new deal earlier in 2009, with start dates in February and April both mooted since Shanks was named as preferred bidder in November 2006 (see letsrecycle.com story).
However, in January, the county council acknowledged that the recession had delayed the process of securing the financing required to get the project up-and-running (see letsrecycle.com story).
Banks
But, as part of today's announcement, Shanks revealed that it had achieved close with a syndicate of three banks – Barclays, Dutch-based NIBC and Japanese bank the Sumitomo Mitsui Banking Corporation (SMBC).
This is the second major waste PPP deal the SMBC has backed this year, after it lent £40 million to help the Greater Manchester waste PFI contract to achieve financial close (see letsrecycle.com story).
As the deal is not a PFI project, it was not eligible to receive a loan from the Treasury's Infrastructure Finance Unit, which was set up in March 2009 to help PFI deals reach financial close (see letsrecycle.com story).
Shanks
The contract is Shanks' fourth PPP/PFI waste deal and the company's chief executive, Tom Drury, said: “PFI partnerships are a key component of our UK strategy and we're delighted to have secured this significant contract gain with a major local authority.
“We now look forward to working with Cumbria county council to minimise the amount of waste sent to landfill and to maximise the opportunities for recovery and recycling of their waste materials.”
Under the contract, Shanks plans to build an MBT facility at Hespin Wood, where planning permission was received in April 2009 and construction is expected to begin later this year, and another in Barrow, with an announcement on that facility expected later this month.
The deal is also set to involve the construction of two new waste transfer stations, at Flusco near Penrith, and Distington, as well as using an existing transfer station at Kendall Fell.
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