Finance for any particular AWT facility is normally provided by banks in the form of a long term loan. Tightening of lending policy as a result of the global financial crisis may affect the future ability of companies developing new AWT facilities to obtain finance for their projects. The only Australian markets in which new AWT facilities are being considered are Sydney, Melbourne and Perth. No new facilities requiring bank funding are currently being developed in Perth.
The Victorian State Government’s plans for AWT are only in early planning stages and are likely to be Government backed in any case. In Sydney, two facilities are under development whose progress might have been affected. These are the SHOROC facility (to be built at Kimbriki) and the Woy Woy MMF being built for Gosford and Wyong Councils.
Whether particular AWT projects obtain financing largely depends upon the contract conditions and the performance requirements and the method of payment. In many contracts, there is a complicated formula which determine the monthly payments to the operator based on key performance indicators such as the amount of material processed, diversion from landfill, hours that the plant operated, number of environmental complaints. In some cases, it has taken many months for the project to reach financial close, because of the lack of understanding of the financiers about the lack of certainty associated with certain aspects of the operations, including the ability of the compost products to be sold, reliability/availability of the processing equipment, and the ability of the process to guarantee maximum physical or chemical concentrations in the compost product.
The financial crisis has has a direct effect on the recycling industry through the drop in commodity prices. This has only really had an effect on those with a majority of their business in the recycling environment, especially where income from the sale of commodities is a key element. However