The recommendation came after Viridor claimed that gate fees at the proposed plant would be 10% higher than forecasted due to “significant changes in the economic climate” and Poole said this meant that the proposal was “no longer economically viable at this time”.
Poole was planning to develop the materials recycling facility (MRF) in partnership with Bournemouth city council, with both councils set to supply material to the plant. Viridor was intended to build, own and operate the facility under a £200 million waste and recycling contract signed in September 2006 (see letsrecycle.com story).
However, in a report issued to cabinet members ahead of the meeting, Viridor explained that it had revised its original business case for the facility and changed its predicted costs for the project. The five reasons for the change were:
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Increased costs in procuring plant equipment due to the weak pound
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Reductions in capital allowances – which encourage investment in particular assets -by £300,000
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Viridor experiencing “more difficulty” in getting access to necessary capital for the MRF project
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Cost of borrowing capital for private enterprise increasing from 6.5% to 8%
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Potential further increases in landfill costs for residual waste at a stage in the future
Cabinet members were asked to approve the termination of the partnership agreement with Bournemouth and Viridor for the MRF and voted to continue with plans for the development of the council's waste transfer station at Nuffield Road, which will incorporate a household waste recycling centre.
Kent
Material intended for the proposed Hatch Road depot is now expected to be treated in Viridor's existing MRF facilities, and the council has a contract to deliver material to Viridor's MRF in Kent until 2011.
Poole council had feared that failure to develop the MRF would end its commingled blue bin recycling scheme. Residents are currently able to recycle glass alongside other materials in the bin and Poole had previously raised concern that if the MRF was not developed, it would face limited options to find an alternative outlet due to the inclusion of glass in the service.
Patrick Murray, South West regional manager at Viridor, said: “In 2006 Viridor signed a long term contract extension with the borough of Poole for waste recycling treatment and disposal services which included strategic partnership provisions and provision of a material recycling facility.”
“Since that date local, UK and international market conditions have changed and in the current climate the provision of a MRF is not considered appropriate. Viridor will continue to provide efficient recycling services and the long term management of Poole's recyclates. This material will be processed within existing Viridor facilities to produce high quality materials for the markets,” he added.
Councillor Don Collier, Poole's cabinet portfolio holder for the environment, said: “The current economic climate means plans for the MRF are no longer viable at this time but we have already received assurances from Viridor that they will be able to provide recycling services for Poole beyond 2011, safeguarding the future of the blue bin scheme.”
“Securing the future of Poole's blue bin recycling scheme was always a major objective of the MRF project. The blue bins have proved very popular with residents and helped to more than double recycling rates in Poole since their introduction five years ago.”
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