5. 3. 97

SUPPLEMENTARY REPORT BY THE

CHAIRMAN OF THE RECOVERED MATERIALS SPECIAL COMMITTEE

1. RECYCLING OF NEWSPAPER RR 4742

A report from the Waste Management Unit to the meeting of the Committee on 20 February 1997 outlined steps that had been taken to address the current low market prices for recycled newspaper.

The report addressed:

• The current situation.
• Costs for a bailing and storage contract.
• Marketing recycled newspaper.

The report concluded that the selling price for recycled newspaper has dropped from a high of $255 per tonne in 1995 to around $40 per tonne in December 1996. To avoid selling into the current low market the Waste Management Unit has let a contract to Waste Control Limited for six months to bail newspaper collected at the kerbside and place it in temporary storage. As the market recovers the newspaper will be progressively sold at the best price to the recycling market. In the short term this is likely to result in a subsidised operation and some resulting over-expenditure on the 1996/97 Waste Management Unit budget. This strategy is in line with the RMSC philosophy that it is imperative that kerbside collection of recyclables is not a stop/start affair.

The operation was running in a loss situation of between $12,000 and $16,000 per month, for which there was no amount budgeted.

The matter was discussed with comment being made in respect of:

• Negatives on such an operation had to be expected from time to time.
• Did the Committee accept that this was a market fluctuation and the newsprint should be stockpiled.
• The availability of external information to gauge where the market is going.
• The availability of overseas markets.
• The ability of the newsprint to be used in the green waste compost process.
• The prospect of the market improving in the near future.

In response to the comments raised by Committee members, officers advised:

• That in fact a good profit had been made by the operation in the last few years ($340,000).
• Newsprint could only be stored for a short period before it starts to deteriorate and there is only storage for 1 month's supply.
• The Napier based agent had been the most consistent over the last three years with prices.
• The Recovered Materials Foundation Trust was investigating more options for the use of newsprint.

The Committee resolved:

1. That the actions taken by the Waste Management Unit as outlined be endorsed.

2. That the situation be reviewed and reported three monthly or as events require.

3. That the Recovered Materials Foundation be requested to investigate the undertaking of an option study for alternative uses for newsprint.

Recommendation: That the deficit created by the recycling of paper be met from the Council's contingency fund, for the period to the end of June 1997.

CONSIDERED THIS 5TH DAY OF MARCH 1997

MAYOR

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