The contract will see Rotherham receiving about £525,000 per annum and will start on May 24 2010 with the material going to a mill in Belgium run by Stora Enso.
The paper will largely consist of newspapers and magazines which Newport will supply to the Stora Enso newsprint mill in Belgium for which the company is Stora's main UK supplier. The mill, in Ghent harbour, produces about 550,000 tonnes a year of newsprint and is a competitor to the UK's three paper mills: Aylesford in Kent, Palm in Norfolk and UPM in North Wales.
Palm Recycling, which took over earlier this year from Abitibi-Consolidated Recycling Europe (which served the now-defunct Abitibi mill on Deeside) lost out on the Rotherham material which it previously received because of the transition process to becoming Palm Recycling.
Both Abitibi and Palm were “disqualified from tendering”, according to Rotherham, because of the administration period involved when Abitibi went into administration. The council revealed that “an indicative rate of £65 per tonne was given in information” by Palm Recycling although it did not submit a formal tender.
Other bidders included Cutts Bros who offered £70 a tonne and Veolia Environment Services which offered £25 a tonne. SITA UK, Severnside and Smurfit Kappa declined to tender.
Options
Newport Paper's contract is for four years with an option to extend for a further three years. The price is fixed for the four years but can be changed if the contract is extended.
The change in the contractor receiving the waste paper follows a decision by Rotherham to take the collection side of its blue bag waste paper service in-house and instead sell the paper under a four year tender for processing and recycling.
Previously Abitibi and then Palm Recycling collected and took possession of the material. From the beginning of April this is now being handled in-house although until the new contract comes into force, Palm Recycling will still receive the paper.
One complex side of the contract is the TUPE regulations covering the staff of a contractor when work is brought in to a local authority. This is expected to mean that about 13 employees from Ward Recycling – Abitibi and Palm's sub-contractor – are transferred to the local authority.
Commenting on the contract award, Dale Otter, Rotherham's recycling manager, told letsrecycle.com: “The nature of waste management is changing and we need to restrict the amount of waste that is sent to landfill. Newport Paper are helping us by ensuring that our paper is recycled in the most effective manner possible.”
Matthew Hoare, Newport Paper managing director, said: “With such a competitive market for recovered material we are delighted to have been awarded this contract. Key to our success was our relationships with one of the world's largest paper re-processors, StoraEnso, which means we can offer Council's long term stability irrespective of the volatility witnessed in the market over the past few years.”
Prices
While the level of the bid for Rotherham's paper has caused some surprise, others in the used newspaper sector and in local authorities expect prices to remain firm. This is seeing prices paid to local authorities of about £100 per tonne in some cases now as mills aim to secure material in the face of lower arisings through reductions in newspaper sales and thinner issues.
Demand will be heavily influenced by the performance of the Palm Paper mill in King's Lynn which gets its official opening in June this year. The company is seen as being anxious to ensure that it has enough material and in particular is reassessing its stocking capabilities have a relatively small storage facility on-site compared to the size of its paper machine and consumption demand.
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