In a statement to the ASX in March, Cleanaway assured stakeholders it has not seen any material change in volumes across any of its operating segments to date.
Cleanaway’s current financial performance for FY20 remains in line with its internal forecasts and FY20 earnings guidance, it said. However, the impact of COVID-19 means Cleanaway considered it prudent to suspend its earning guidance.
Cleanaway Managing Director Vik Bansal said the company has not observed any decline in overall trading in any of its operating segments to date.
He said that however, as the COVID-19 situation evolves, Cleanaway expect the SME part of its C&I waste volumes to be impacted.
“At this stage, we expect the demand for other services, such as health, municipal collections and related post-collections services to remain strong,” Mr Bansal said.
“Cleanaway provides a range of essential services to a diverse customer base which includes municipal councils, government infrastructure, hospitals, resources, manufacturing, commercial and industrial customers.
“We are taking measures to help ensure the safety and welfare of our employees and customers and we remain confident in the resilience of our business.”
Following the collapse of SKM Recycling Group, Cleanaway Waste Management acquired the senior secured debt in the group for around $60 million, with the exception of its glass recovery services business. This includes the property, plant and equipment from a network of five recycling sites, comprising three materials recovery facilities (MRFs), a transfer station in Victoria and a MRF in Tasmania. SKM also has two sites in South Australia.
Cleanaway’s Footprint 2025 strategy went from strength to strength as Cleanaway in October announced a joint venture with Macquarie Capital’s Green Investment Group to develop a waste-to-energy (WtE) project in Western Sydney.
Victoria’s landfill levy increase is set to have an immediate impact on recovery rates, according to Bingo Industries Managing Director Daniel Tartak.
The increase – $65.90 to 125.90 over three years – is one of many changes outlined in Victoria’s new circular economy policy Recycling Victoria, released earlier this week. Additional changes include the introduction of a container deposit scheme and a $100 million infrastructure investment.
Mr Tartak welcomed the levy increase, applauding the state government’s bold efforts to develop Victoria’s recycling economy.
“It will further encourage recycling, optimise the diversion of waste from landfill and promote the development of a truly circular economy; promote investment in recycling technology, and move Victoria towards international best practice diversion rates,” Mr Tartak said.
“The staged increase in the levy also works well for our customers, who can now plan ahead for this and other structural changes, such as the new EPA Act and increased safety and compliance regulations which will also impact the sector.”
According to Mr Tartak, the polices, commitments and actions outlined in the plan align with BINGO’s Victorian strategy.
“We’ve invested more than $100 million over the past three years in the acquisition and development of recycling assets in anticipation of many of the initiatives outlined in this plan,” he said.
“We recently received approval to operate our advanced recycling facility in West Melbourne for 24 hours per day, seven day per week, so we’ll be ready to accommodate the increased volumes we expect to receive from 1 July onwards. ”
Mr Tartak also highlighted the plan’s support for the development of waste-to-energy facilities, increased resources to monitor illegal behaviour and commitment to increasing the use of recycled materials in construction projects as positive.
According to Alex Fraser Managing Director Peter Murphy, Recycling Victoria’s long term measures will help Victorian recover from the recycling crisis and take a leadership position, including in the use of recycled content in infrastructure.
“We’re pleased to see that the Victorian Government has released its new circular economy strategy – Recycling Victoria – overhauling the state’s recycling sector and further reducing waste going to landfill,” Mr Murphy said.
“The industry requires long term decisions, and the 10-year plan features reforms to accelerate Victoria’s shift to a circular economy, including supporting businesses and communities, creating local jobs, and leading the way in the use of recycled materials.”
In reference to Recycling Victoria’s container deposit scheme announcement, Cleanaway CEO Vik Bansal said the move was a step in the right direction towards achieving a circular economy.
“At Cleanaway we have seen firsthand the environmental, economic and social benefits of a container return scheme,” he said.
“A system that encourages consumers to separate recycling at the point of disposal improves the quality of the recyclable material, which makes it an even more valuable commodity for reuse.”
Mr Bansal also applauded the Victorian Government’s efforts to improve the quality of recyclable material across the state.
“The introduction of a fourth recycling bin for glass is expected to reduce contamination and create a cleaner commodity stream,” Mr Bansal said.
“This, in turn, means more materials will be recycled and opens up opportunities for a circular economy for glass.”
Waste Management Review talks to some of Australia’s largest waste management companies about the role of scalability in the future of the waste sector.
This article is the second in a three part series featuring Bingo Industries, Cleanaway, Corio Waste Management and SUEZ.
With more than 300 sites, 115 prized infrastructure assets and around 6000 employees and 4950 vehicles, Cleanaway is Australia’s largest waste management company.
At the heart of its approach to scaling up and supporting Australia’s recycling woes is Cleanaway’s Footprint 2025 strategy – a plan to significantly grow its infrastructure by 2025. Launched in 2015, Footprint 2025 continues to expand.
It’s already done so in 2019 with a new waste transfer station and resource recovery facility in Sydney licensed to process 300,000 tonnes of putrescible waste per annum. In addition, its recent infrastructure moves also include a new South East Melbourne Organics Facility, a 50 per cent stake in ResourceCo’s process engineered fuel facility in Sydney and a transfer station in Perth.
Official data on market share is difficult to come by, but CEO Vik Bansal estimates the company controls around the mid to high 20 per cent of the total waste management market.
Its annual report shows the integration of Toxfree is on track to achieve a $35 million synergy target by June 2020. Cleanaway’s acquisition of Toxfree in 2018 was unopposed by the ACCC and concluded that increased vertical integration would be unlikely to substantially lessen competition due to competitive constraints imposed by alternative suppliers.
The official review shows customers can and do disaggregate contracts if they are dissatisfied with pricing and/or service levels. Likewise, there are other large suppliers present in multiple waste streams and geographical areas throughout Australia.
Cleanaway’s net revenue, which represents gross revenue less landfill levies collected and passed through the customer, increased by 35 per cent in 2018-19 to $2.11 billion compared to the prior corresponding period. Its growth was driven by a combination of organic growth and the Toxfree acquisition.
“We have spent about $150 million building prized waste infrastructure across the country which includes transfer stations, resource recovery centres, used oil refinery and liquid, hazardous and non-hazardous waste processing facilities organically and via the acquisition of Toxfree,” Vik says.
Its earnings before interest, tax, depreciation and amortisation increased 34 per cent to $433.7 million in 2018-19 due to improved profit performances across solid waste services, industrial and waste services and liquid waste and health services. In its annual report, Cleanaway highlights itself as having an excellent balance sheet with debt ratios well within banking covenant requirements.
The annual report declares volatility in the commodities supply chain has led to increased sorting costs and instability in commodity pricing. Vik has often maintained Australia’s recycling crisis presents an opportunity rather than a threat to the viability of the sector.
“It is the right thing for the waste industry in Australia and in general. There is something not right about waste going to developing countries and them sorting it out. We just don’t want that to happen,” Vik says.
He says that being a publicly listed entity places additional pressure on Cleanaway as a company, but it’s a challenge it is pleased to take on.
“Because we are a listed entity and have to go to market every six months, our changes become a lot more visible than an international subsidiary or a company which is not listed,” he says.
The positive side effect of market fluctuations is that Cleanaway has fast-tracked much of its Footprint 2025 strategy to support the local marketplace.
Following the collapse of SKM Recycling Group, Cleanaway Waste Management acquired the senior secured debt in the group for around $60 million with the exception of its glass recovery services business. This includes the property, plant and equipment from a network of five recycling sites, comprising three materials recovery facilities (MRFs), a transfer station in Victoria and a MRF in Tasmania. SKM also has two sites in South Australia.
KordaMentha have been appointed the receivers of the group. At the time of Waste Management Review’s interview with Vik, Cleanaway was looking to acquire the assets and return them to a sustainable footing as part of the sale process being undertaken by the receivers.
Prior to the publication date, Cleanaway was successful in its bid for SKM assets with completion of the process on track for the end of October. One of its sites in the network includes an advanced plastic sorting facility in Victoria.
Commenting on the acquisition, Vik said significant progress had been made in clearing waste stockpiles from the sites, repairing plant and equipment and bringing the sites to required safety, environmental and operational standards.
“We expect to gradually restore operations in Victoria over the coming months,” he said.
Speaking to Waste Management Review, Vik agrees some systematic changes are needed to support the future viability of the industry. However, he concedes collection will be difficult to consolidate due to the low barriers to entry.
“There is something fundamentally wrong about the industry structure. Aside from Visy, there is not even a single big waste management player which is upstream and vertically integrated. There is not even a single big waste management player in commingled recycling in Victoria.
“China’s National Sword has triggered the industry structure to go back on a balanced, even, long-term sustainable footing and hence our interest in SKM assets.”
“A company like Cleanaway cannot have a Footprint 2025 strategy flowing through without commingled assets in Victoria. That is part and parcel of a vertically integrated waste management company.”
It was speculated that Cleanaway was interested in buying SKM’s glass recycling business not covered by the receivership. Vik says that while Cleanaway was initially interested in this, the acquisition is now in doubt given the scale of glass stockpiles.
Instead, should Cleanaway acquire SKM’s assets, Vik says Cleanaway will look at building its own glass beneficiation plant.
He says that Cleanaway’s future focus will be to become a downstream processor.
“We see ourselves investing in plastic pelletising and going downstream on glass crushers,” Vik says.
Vik says that Cleanaway’s view is that Australia needs to move to a harmonised national four-bin system with mandatory FOGO and glass bins the key to improving commodity value.
“We are ready to invest a lot more in different parts of the country if we can see that certainty of policy and harmonisation,” he says, adding there is a fair amount of Footprint 2025 still to be revealed.
Likewise, he says that whenever Cleanaway invests, it looks at the entire value chain, including location, policy framework and its total market share.
Vik says that each state should have a container deposit scheme but recognises it might be difficult to harmonise all at a national level.
He says this system would then become best practice through better education, investment in infrastructure and manufacturer and consumer acceptance of recycled material as the final piece of the circular economy puzzle.
Footprint 2025 is going from strength to strength as Cleanaway in October announced a joint venture with Macquarie Capital’s Green Investment Group to develop a waste-to-energy (WtE) project in Western Sydney.
A site has been acquired for a potential facility in Eastern Creek and an environmental impact statement is being prepared and released for public consultation early next year. The site is expected to cut Western Sydney’s annual landfill volumes by 500,000 tonnes – almost a third of the red bin waste generated per year in the local area.
Trevor Thornton is a lecturer in hazardous materials management at Deakin University and has prior experience with the Environment Protection Authority Victoria.
He says the metropolitan areas certainly benefit, but one concern would be whether the same level of service is afforded to regional areas.
“I’ve heard some issues about large companies that get a statewide contract but just outsource a lot of the more distant rural areas under their banner, but they don’t get the same service to the client.
“But I think in the main, if you’ve got five or six companies offering the complete service, I think that’s a good thing.”
Likewise, he believes the purchase of ailing companies such as SKM can only be a good thing, and that if additional oversight is required, that would be a matter for the ACCC.
He says the trend towards consolidation in Australia would mirror that of other more populous nations such as the US, Canada and parts of Europe.
Mathew Dickens, CEO of Corio Waste Management, a family-owned business focused on waste collection and organic waste treatment based in Geelong, sees an opportunity from consolidation to compete with the major players.
“Consolidation does lead to less competition, but it can also mean the acquirer has more to lose as you have most of the market share and that can only go in one direction, but for companies my size it creates opportunity,” he says.
Mathew says with further consolidation, Corio can aim to compete on service standards, respond quickly to changing customer requirements and provide a point of difference as a family-owned business.
“From a customer perspective it [further consolidation] would mean less choice and higher prices, and that’s not a problem for us as we don’t compete on the basis of price. We know what our costs are because we measure and analyse them all the time,” he says.
He says that Corio tends to focus on what it can offer in terms of variety and frequency of service, collection standards and customer service.
Mathew says the recent consolidations are nothing new but rather history repeating itself in an industry cycle where consolidation inspires new entrants into the industry.
In the US, integrated companies such as Waste Management Inc, Clean Harbors, Republic Services and Advanced Disposal dominate the market.
Mathew points out that Republic Services is an example of smaller operators merging to become a larger organisation, a trend that could always repeat itself locally.
Republic Services is one of the largest providers of non-hazardous solid waste and owns around 207 transfer stations and 190 landfills, according to Superperformance SAS data.
He says there will still be room for niche, specialised operations that handle smaller volumes.
“If there is going to be a remanufacturing industry that’s developed onshore, you need to spread that risk,” he says.
Mathew says that Corio remains focused on growing its organic waste collections in Geelong and Melbourne treated at its composting facility based in Shepparton.
“We want to build tunnel composting facilities in other regions in Victoria. It relies on government contracts, but we’re confident we can make it happen,” he says.
Next week’s instalment features an interview with SUEZ CEO Mark Venhoek.
Cleanaway Waste Management has acquired the assets of SKM Recycling for approximately $66 million.
The acquisition follows a public sale process by KordaMentha, who were appointed receivers and managers of SKM by Cleanaway, after the company acquired SKM’s senior secured debt.
Cleanaway CEO and Managing Director Vik Bansal said significant progress had been made clearing waste stockpiles, repairing plants and equipment and bringing SKM sites to required safety, environmental and operational standards.
“I would like to acknowledge and thank the Victorian Government who helped expedite the clearing of waste stockpiles and the return of operations at the Laverton North site, through the loan provided to the receivers,” Mr Bansal said.
“We expect to gradually restore operations in Victoria over the coming months, to provide councils with a quality, sustainable solution for their recycling.”
Pursuant to the acquisition, Cleanaway will obtain the properties, plant, equipment and other assets of SKM, subject to customary completion adjustments.
The acquisition will provide Cleanaway with a network of five recycling sites, including three material recovery facilities and a transfer station in Victoria and a material recovery facility in Tasmania.
One of the Victorian facilities, in Laverton North Victoria, includes an advanced plastic sorting facility that separates plastics into individual polymer grades for sale or input into pelletising facilities.
According to an ASX statement, the acquisition also includes two properties in South Australia, which are not currently expected to form part of future operations and may be sold.
“Cleanaway is expected to offer employment to the majority of SKM’s full time staff,” the statement reads.
Completion of the acquisition is expected to occur by the end of October, with sale proceeds applied to repay Cleanaway’s senior secured debt, accrued interest and costs associated with the receivership.
Cleanaway CEO Vik Bansal has officially opened the company’s new Perry Road Office and Collections Depot in Dandenong South.
The 53,000 square meter depot will house Cleanaway’s business and operational teams including the Victoria Post Collections leadership team, the commercial, industrial and municipal collections’ business, sales, administration, finance and fleet teams.
According to a Cleanaway news statement, the site features a 20-bay workshop facility designed for vehicle compliance and fleet productivity, with paved parking areas for 164 collection vehicles and the new electric vehicle fleet.
“The site is also equipped with fuelling stations with 100,000 litre capacity and automatic truck and parts washing bays,” the statement reads.
“Bringing together our administrative and operational teams from across Greater Melbourne is a key step forward to serving our customers better and making a sustainable future possible for communities across Australia.”
The first of two fully electric Cleanaway waste collections vehicles have begun kerbside collections in Victoria as part of a three-month trial.
The first vehicle began servicing household collections in Hobsons Bay. City of Greater Geelong and Moonee Valley will also host the vehicle to ensure it is tested across a variety of terrain and in different municipal settings.
Cleanaway CEO Vik Bansal said the vehicles are among the first in Australia to service kerbside collections, and will be under pressure to carry full loads and complete scheduled runs every day.
“With almost 5000 vehicles on the road each day, servicing homes and businesses all over Australia, we are looking for ways to do that more sustainably while continuing to deliver consistent service,” Mr Bansal said.
“Sustainability is about more than removing emissions at all costs. If service levels drop or waste collection costs increase significantly for ratepayers – that isn’t sustainable.”
Cleanaway Head of Fleet Paul Young said the company is optimistic about proving the reliability of the technology.
“The trial is designed to encourage fast learning so the electric vehicles can continue operating once the trial has ended, allowing Cleanaway to introduce more electric and combination fuel vehicles to the permanent fleet,” Mr Young said.
“With zero emissions, the vehicles are expected to run for 180-200 kilometres before needing to recharge. The brakes also regenerate – reducing repair and maintenance costs and the consumption of other parts like brake pads.”
According to Mr Young, the vehicles significantly reduce noise, making early morning or late-night collections possible for some waste streams.
Hobsons Bay Mayor Jonathon Marsden said the trial complements the great work already happening in the sustainable transport realm.
“These initiatives support our key priorities in the Hobsons Bay 2030 Community Vision of exploring sustainable practices and growth through innovation, technology, job creation and education,” Mr Marsden said.
“It’s also a step in the right direction of council’s draft Waste and Litter Management Strategy 2025 to trial alternative fuels in the waste, recycling and litter collection fleet.”
The vehicles were commissioned by Cleanaway in conjunction with SEA Electric and Superior Pak and are not yet in mass production.
Cleanaway has announced its financial results for the six months ending 31 December, reporting the integration of Toxfree is on track and all operating segments increased revenue and earnings.
An ASX statement shows gross revenue increased by 46.4 per cent to just over $1.7 million, with net revenue increasing by 47.4 per cent to just over $1.6 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 43 per cent to $221 million.
The company’s solid waste services reported net revenue increases by 30 per cent to $682 million, with EBITDA growing by 26 per cent to $176 million. Growth was reportedly enhanced by the ramp up of major contract wins such as the NSW Central Coast, Coles, NSW Container Deposit Scheme and commencement of a Brisbane City Council resource recovery contract.
Cleanaway’s industrial and waste services reported increased net revenue, earnings and margins, with net revenue increasing by 129 per cent to $177 million. EBITDA increased 194 per cent to $23.2 million. The company said modest organic growth occurred taking into account the completion of the Toxfree Wheatstone project.
The acquisition of Toxfree has increased scale in this segment, allowing for segementation and management across two strategic business: resources and infrastructure.
The statement said that the pipeline of work across both infrastructure and resources markets is encouraging, although at this stage it is too early to be confident on the timing of project commencements.
The liquid and health services segment saw net revenue increase by 77 per cent to $251 million and EBITDA by 93.2 per cent to $42.7 million.
“Hydrocarbons had a good first half and remains on track for further growth with increased production efficiencies and improved oil price movement,” the ASX statement read.
“Hazardous and non-hazardous liquids performance was disappointing. We are working to improve its performance and remain confident that this will be achieved.”
An interim dividend of 1.65 cents per cent has been declared representing an increase of 50 per cent over the corresponding period.
Positive earnings momentum is expected for the remainder of the year via organic growth and full realisation of synergies.
Cleanaway Chief Executive Officer Vik Bansal said he was pleased to present results that deliver on the company’s promise and commitments.
“The safety of everyone at Cleanaway has and always will be our number one priority. The alignment of culture and behaviours needed to ensure our target of Goal Zero remains a priority as we continue the integration of Toxfree,” he said.
“We are pleased with the Toxfree integration process and remain confident of delivering the $35 million of synergies from the acquisition.”
Mr Bansal said that while margins have improved compared to the second half of FY18, the company believes that further improvements can be achieved as it continues to implement synergies and operational improvements across all segments and businesses.
“Development of our prized infrastructure as part of Footptint 2025 continued at pace. During the half we completed construction of post collection facilities in Sydney and Perth, an organics facility in Melbourne and upgraded our soil treatment facility in Sydney,” he said.
“The acquisition of Toxfree and the numerous strategic initiatives which we continue to implement across the company have further strengthened our position as the leading waste management company in Australia.”
Cleanaway has officially opened its new automated optical Container Sorting Facility at Eastern Creek, NSW.
The facility initially opened on 1 December 2017 and included a manual sorting line, which used magnetic sorting and manual picking to separate steel, aluminium, cartons and plastics with a capacity of 1.5 tonnes per hour.
With construction of the new automated sorting line completed, the facility now has a capacity of eight tonnes per hour.
Optical sorters used in the plant identify containers based on their material type at thousands of reads per minute with air jets being used to separate them for compaction and baling.
These baled materials are then distributed domestically and internationally to be recycled back into food grade containers.
Since beginning operation last year, the facility has processed most of the 900 million containers collected by the NSW Return and Earn scheme.
The NSW Government’s scheme aims to reduce the volume of litter across the state by providing a 10-cent refund for each eligible container returned.
Cleanaway CEO and Managing Director Vik Bansal said schemes such as Return and Earn require the community to pre-sort containers for recycling, reducing the level of contamination at the source.
“With the new sorting technology installed at this facility, we are now able to improve the quality of the commodity streams even further,” Mr Bansal said.
“The Eastern Creek Container Sorting Facility is a critical part of our Footprint 2025. We’re committed to putting the infrastructure and facilities in place to deal sustainably with Australia’s waste, well into the future.”
Mr Bansal says the challenges facing the waste industry over the past 12 months have changed the way Australians view waste.
“It is more important than ever before that we work together to address these challenges. Return and Earn is a great example of that,” he said.
“It has been encouraging to see so many people getting involved and increasing the amount of recyclables being sorted at the source.
Coupled with a better network of facilities to sort the containers collected, we can produce commodity streams which are in demand, meaning more items are being recycled into new products,” Mr Bansal said.
NSW Environment Minister Gabrielle Upton said the Return and Earn had been a great success, reducing litter across NSW by a third.
“I commend the people of NSW and congratulate Cleanaway on their state of the art facility that supports Return and Earn to provide a smart solution to reduce litter in NSW and contribute to a more sustainable future,” Ms Upton said.
The largest resource recovery and Processed Engineered Fuel (PEF) plant in Australia has been unveiled at Wetherill Park in Sydney.
Owned in a joint venture between resource recovery company ResourceCo and Cleanaway, the plant is licensed to receive up to 250,000 tonnes a year of dry commercial and industrial, and mixed construction and demolition waste, to recover commodities including metal, clean timber and inert materials, with the balance converted into PEF.
Over its lifetime, the plant is expected to abate more than four million tonnes of carbon emissions.
Cleanaway’s customer base and waste supply in NSW will help drive volume to the facility to divert waste from landfill.
PEF is used as a substitute for fossil fuels in both domestic and offshore markets in the production of cement.
The plant will supply Boral, Australia’s largest construction material company, with PEF for its Berrima cement kiln as a substitute for coal.
Chief Executive Officer Sustainable Energy at ResourceCo Ben Sawley said the new plant will divert up to 50,000 truckloads of waste from landfill, while also reducing reliance on fossil fuels such as coal and gas.
“It will replace over 100,000 tonnes of coal usage per year alone and will take the equivalent of 20,000 cars annually off the road in terms of greenhouse gas emissions,” Mr Sawley said.
“We’re committed to playing a key role in Australia’s future sustainable energy mix, by reducing waste and lowering carbon emissions through production of a commercially viable sustainable energy product,”
“The opportunity to tap further into this market is huge and it makes good sense, both environmentally and economically,” Mr Sawley said.
Cleanaway Chief Executive Officer Vik Bansal said this is an important new resource recovery solution in New South Wales that creates a landfill diversion option for commercial and industrial, residual recycling, and some construction and demolition waste.
“Investment in resource recovery and innovative waste to energy solutions is essential to making a sustainable future possible, and one of the ways we’re delivering on our Footprint 2025 strategy,” Mr Bansal said.
CEFC CEO Ian Learmonth said the priority in managing waste must be to reduce the amount waste produced in the first place.
“With what remains, we need to invest in proven technologies to repurpose it, including as alternative fuels. By turning waste into PEF, this facility is showing how industrial processes can reduce their reliance on fossil fuels,” he said.
“We can also reduce the amount of waste materials going into landfill, an important factor in cutting our national greenhouse gas emissions,” Mr Learnmouth said
CEFC Bioenergy and Energy from Waste Sector lead Henry Anning said the CEFC was working with the waste management sector to increase energy efficiency and energy generation, as well as reduce carbon emissions.
“With Australia’s waste sector facing considerable disruption, now is the time to adopt new ways of doing business,” Mr Anning said.
“With the right investment in proven technologies, companies can turn our urban and industrial waste into new energy sources, creating an important revenue stream while also reducing landfill gas emissions.
“In Australia there is a growing commercial opportunity for resource recovery, reinforced by tightening state government landfill regulations. We are working alongside waste companies to invest in long-term infrastructure that can make a lasting difference to the way we handle our waste,” he said.
Cleanaway has entered into a binding joint venture agreement with ResourceCo to acquire a 50 per cent interest in ResourceCo’s Wetherill Park facility.
ResourceCo’s new Wetherill Park facility has the capability to divert 250,000 tonnes of waste per annum, reducing emissions and saving costs for businesses in the long-term – more information on that here.
Located in western Sydney, the facility receives dry commercial and industrial waste. After extracting any commodities suitable for recycling, the balance of non-recyclable waste is converted into Process Engineered Fuel (PEF) that will be used as a substitute for fossil fuels in domestic and offshore cement kilns.
According to an ASX statement, the investment provides Cleanaway with a further waste disposal solution in NSW and forms an integral part of its Footprint 2025 strategy.
Waste processed by the facility includes residuals sourced from the Cleanaway Sydney transfer station, currently under construction, and other recycling facilities, in addition to commercial and industrial customers with source-separated collection systems.
The purchase price for the 50 per cent interest comprises a $25 million payment at completion plus an earn out of up to a further $25 million payable in two instalments over two years once the facility generates agreed earnings before interest, taxes, depreciation and amortisation targets.
The joint venture, to be branded “Cleanaway ResourceCo RRF” is part financed by a $10 million loan facility from the Clean Energy Finance Corporation, with additional funding from the New South Wales Environmental Trust.
The transaction is expected to be complete during the first quarter of financial year 2019, subject to satisfaction of customary conditions precedent and commissioning and performance standards.
Cleanaway Chief Executive Officer and Managing Director Vik Bansal said the investment plays a key role in the development of the company’s post collections footprint in NSW and its overall Footprint 2025 strategy, which encompasses the development of prized waste infrastructure assets across Australia.
“This facility is the only one of its kind on the East Cost of Australia and enables us to increase waste internalisation rates, and importantly, to offer an advanced resource recovery solution to our customers,” Mr Bansal said.