Issue - meetings

Report of the Managing Director for Coventry Municipal Holding Limited and the Chief Operating Officer

The Cabinet considered a joint report of the Managing Director of Coventry Municipal Holdings Limited and the Chief Operating Officer, which set out preferred options to finance the development of the material recycling facility (MRF) by seeking funding to Tom White via a commercial loan.

A corresponding private report detailing confidential financial matters was also submitted for consideration (Minute 46 below refers).

The Business Plan for Tom White (TW) for 2022/23 was approved by the Shareholder Committee in March 2022 which supported Tom White business growth and ongoing development.

The business plan set out proposals to redevelop the Tom White recycling infrastructure at Longford Road site.  Once completed, this redevelopment would improve the environmental performance of Tom White, dramatically increase the recycling rates for commercial waste and help to increase the financial dividend payable from Tom White back to the Shareholder (the Council).

Tom White growth generally, and the facility redevelopment specifically; focused on tackling climate change and supporting the One Coventry Plan and Climate Change Strategy by:

·  Enhancing the recycling ability by reducing burden on raw materials and promoting circular economy;

·  Achieving greater diversion of commercial waste from landfill; and

·  Increasing energy production either directly or through a fuel manufacture.

The recycling facility redevelopment was core to these growth objectives, and the diagram at Appendix C showed how the new MRF sits in the context of overall waste management and recycling in Coventry and the sub-region.

The current recycling plant and equipment used by TW has historically suffered with little planned maintenance under previous ownership and as it reaches the end of its economic life was now experiencing significant breakdowns, with plant availability reducing considerably.  During April to December 2021, the facility experienced 72 days of plant downtime.  The impact of this was an increased cost of maintenance (plant and vehicle repairs and spares) and increased plant hire in the financial year 2021/22.  There was also an increased cost of disposal due to more material going to landfill due to the plant not being available to sort material for an alternative, cheaper and environmentally sustainable disposal route as a fuel source for onward processing.

The existing plant performance was causing significant cost pressures in Tom White, such that month to month the business is currently operating at about ‘break even’.  Accordingly the new plant solution would remove the cost pressures that undermine profitability and allow the business to get back on track for profit and dividend availability.

In the short term the Tom White management team have hired new resilient mobile equipment to compensate for the poor performance of the plant.  This means that the old unreliable plant does not need to be run, thereby cutting significantly the maintenance costs and subsequent impacts.  However this is not a long term solution for the volume of waste processed through the facility, nor would it provide the opportunity to enhance recycling rates and improve financial returns to the shareholder. 

The management team at Tom White have been working with its preferred  ...  view the full minutes text for item 41