The cost of replacing Canberra’s fire-damaged recycling facility in Hume has risen to almost $37 million, an increase of $11 million over initial estimates, according to a development application released this week.
The new Materials Recovery Facility (MRF) was originally projected to cost $26 million, with funding shared between the Australian Capital Territory and the federal government. The revised figure reflects the financial contribution of Veolia, the waste management company contracted to design, build, and operate the facility for the next 20 years, an ACT Government spokesperson said.
Veolia secured an $850 million deal with the ACT Government in January 2025 to deliver the state-of-the-art MRF. The government utilizes a Build-Own-Operate-Transfer model, where Veolia finances the delivery phase costs. The $26 million represents the Territory’s capital contribution, including Commonwealth funding, and not the total project cost. “The remainder of the overall delivery phase cost will be funded by Veolia,” the spokesperson explained. “In turn, the Territory will provide monthly service payments to Veolia during the 20-year operating period, which cover both operating and a recovery of capital costs.”
The development application details a $36,972,799 project encompassing the construction of processing and support buildings, landscaping, internal access roads, and essential infrastructure. It also includes an education building for community and school visits, a carpark, and associated utilities work.
The original Hume facility, capable of processing 60,000 tonnes of waste annually, was destroyed by a fire on Boxing Day 2022, triggered by the improper disposal of lithium batteries. Since then, Canberra’s recyclable waste has been transported to processing facilities in Sydney and Victoria. An investigation released in April 2023 by ACT Fire & Rescue confirmed that batteries were the cause of the blaze, specifically identifying “thermal runaway” caused by multiple batteries in the waste compactor.
The new MRF is designed to process up to 115,000 tonnes of mixed recyclables per year – a nearly 50,000-tonne increase in capacity. It will employ advanced sorting technology, including a glass purification plant, automatic recognition systems, screens for paper separation, laser optical identification for plastics, and powerful magnets for metal extraction. The facility aims to improve recovery rates and the quality of recyclable materials.
Currently, the ACT sends approximately 46,000 tonnes of mixed recyclables interstate each year for processing. The new facility is expected to begin construction in 2026, pending final planning approvals, and turn into operational in 2028.
The demolition of the fire-damaged buildings commenced in September 2025 and took several months to complete. The project is anticipated to create over 100 jobs during construction and approximately 24 permanent positions upon completion.
The MRF project has faced scrutiny, with the Canberra Liberals previously arguing that the business case was flawed and that utilizing interstate recycling services would be more cost-effective. The government has disputed this claim. The development application is open for public comment until March 10th.
The new facility has been designed with state-of-the-art fire detection, mitigation, and control systems to prevent a repeat of the 2022 fire.
