Bushfires in New South Wales have forced Veolia Environmental Services to temporarily stop processing of recyclable materials at its Echuca facility.
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Veolia collects recycling from a number of local councils including Mount Alexander, Loddon, Central Goldfields, Berrigan, Swan Hill, Gannawarra, Murray and Moira shires.
The closure means Mount Alexander and Loddon shires' recycling will go to landfill in the short term.
The Echuca facility has suspended its processing due to bushfires affecting the Visy Tumut Mill, near Gundagai in New South Wales.
A Veolia spokesperson said there were also safety and regulatory issues associated with stockpiling recycled materials.
"We have had to temporarily suspended processes due to bushfires in southern NSW, particularly the one affecting the Tumut paper mill (who have) advised us can no longer accept mixed paper," the spokesperson said.
The Veolia spokesperson said 40 per cent of the output from the Echuca site's processing is mixed paper that goes to Tumut.
"We need to be mindful around stockpiling on site," the spokesperson said. "There are EPA guidelines need to be aware of to make sure we are safely operating."
Victorian environment minister Lily D'Ambrosio said she understood the decision was necessary to keep the community safe and avoid stockpiling.
"We're working closely with the affected councils to look at alternatives for managing kerbside collection during this time."
Mount Alexander Shire infrastructure and development director Phil Josipovic said council was working with Veolia to find solutions.
"We know that many of our residents, community groups and businesses are keen recyclers and, like us, will be disappointed in this outcome," Mr Josipovic said.
"We are hoping the state government's circular economy policy and action plan, due for release soon, will help us all work together to developing some solutions on this issue."
Waste collection will continue as normal in Mount Alexander with residents encouraged to not put out their recycling bins until they are full. Residents can also drop off sorted recyclables at transfer stations in Castlemaine and Maldon for free.
Campaspe Shire chief executive Declan Moore said the shut down was adversely impacting council's recycling stream.
"Veolia are monitoring the situation daily and as soon as practicable, the MRF will reopen and recycling will continue as normal," Mr Moore said.
Central Goldfields Shire acting chief executive Rebecca Stockfield said the shire had not yet been affected.
"Council is monitoring the situation," she said. "We urge residents to continue their good waste separation and recycling habits."
Municipal Association of Victoria deputy president (rural) Ruth Gstrein said no council wants to see recyclable material sent to landfill.
"This current situation again highlights a lack of resilience in our recycling system," she said.
"The bushfires have affected the operation of a paper mill, and that has flow-on effects to multiple councils across a whole region.
"We need investment and policy leadership to strengthen our waste and recycling system, as laid out in our Rescue Our Recycling Action Plan.
The spokesperson said Veolia was unsure how long the shut down would last.
"We are waiting on information from the paper mill. They will advise when they are in a position to receive (recycling)," they said.