Australia's largest waste collector Cleanaway says it could be forced to send some recyclables to landfill or stop collecting kerbside bins in three Perth metropolitan councils within a week if the local governments involved do not agree to higher fees.

The country's waste collectors sell the vast majority of their recyclables to commodity traders who then on-sell to overseas markets such as Indonesia, Malaysia, Korea and China for re-manufacture.

Until recently, China was Australia's biggest buyer, taking 600,000 tonnes of material each year.

But in January the Asian powerhouse stopped importing 24 categories of solid waste to reduce pollution.

That decision caused waste commodity prices to plummet, with some collectors — including Cleanaway — reporting a 70 to 80 per cent drop in price and in some instances being forced to pay for the recyclables to be taken away.

Fee impasse puts bin collection at risk

Cleanaway's David Williamson said the company had been in negotiations with councils since February. ( ABC News: Kathryn Diss )

Cleanaway said its processing costs have risen by as much as 50 per cent since September, which is why it is being forced to negotiate new recycling charges.

The company has long charged councils around $20 a tonne despite the true cost of processing being more than three times higher, because the commodity's historically high value had provided a subsidy.

Those processing costs have since jumped to around $120 a tonne while at the same time the value of the commodity has fallen by 50 per cent.

Mr Williamson said Cleanaway had proposed a four-fold increase in processing fees to shoulder the cost increase, which it argues is still far less than what it was paying.

Cleanaway has been negotiating with 20 local governments across the state since February, but said it had failed to make headway with three of them.

"We're right at the tipping point of having to make a decision to either in some instances, not collect the bins, or not process or divert to landfill," Cleanaway's WA Solid Waste Services general manager David Williamson said.

"If they choose not to engage then we can't continue to have these exorbitant costs imposed on us to deliver that service to them and their councils."

Mr Williamson said a handful of councils had agreed on new terms for their recycling costs, but a significant number were yet to do so.

"There's a big bunch in the middle we're still working with in a positive light, but then there's three or four that are choosing not to work with us at all," he said.

For commercial reasons the company declined to name the councils it claimed were not negotiating, but revealed the three collectively made up between 20 and 30 per cent of Cleanaway's overall collection.

Ratepayers 'should share recycling cost'

Rubbish is piling up at the Cleanaway South Guildford waste management facility. ( ABC News: Kathryn Diss )

The New South Wales and Victorian governments have both provided multi-million-dollar rescue packages to prop up the industry in the short term, and to alleviate cost pressures on councils.

So far, the WA Government has ruled out similar measures, but Mr Williamson said he believed it was a necessary first step to helping councils and waste collectors meet China's new standards.

Cleanaway regularly collects household waste, which is up to 18 per cent contaminated. It now has to be lowered to 0.5 per cent before it can be sent to China.

Mr Williamson said councils and ratepayers had to share some of the cost burden of bringing their recyclables up to standard.

"The cost of recycling is going up," he said.

"It's quite significant in percentage terms in terms of processing, but in terms of the overall cost of waste and recycling management it's quite minor.

"We're talking something like less than 10 per cent for most councils. And if you extrapolate that out to what it would mean for a resident, it would be two or three per cent to their annual rates."

Contaminated waste on the floor at Cleanaway's south Guildford waste management facility. ( ABC News: Kathryn Diss )

Mr Williamson said the biggest factor in the cost increase was the need to remove contaminated material from the collected waste.

"That's really the biggest driver here, (and) China have done what they did because of high levels of contamination," he said.

"So that's forcing us to employ a lot more people and pull that material out the best we can and as difficult as that is.

"The contamination going into the bin actually causes damage, we're getting items that aren't supposed to be there and then you've got the storage element as well.

"We're at our maximum capacity of what we can store here, it's much harder to move products in the current climate."

The ABC understands the councils involved are Wanneroo, Armadale and Joondalup.

A 'concerning' development

WA's Environment Minister Stephen Dawson previously urged the Commonwealth to intervene on a diplomatic level, and in March he set up a taskforce to advise the best way to deal with the crisis.

In a statement, Mr Dawson confirmed Cleanaway had advised him of the action they were considering taking, which he described as "concerning".

"I would encourage all local governments and private enterprises in the waste management arena to fully engage in finding a solution before residents of these few local government areas are adversely affected," he said.

"Everyone needs their waste to be collected, and no one wants to see good quality, recyclable materials going to landfill.

"The State Government and the Taskforce will work closely with stakeholders, including Cleanaway, to help identify potential short-, medium- and long-term responses."

The ABC has contacted the WA Local Government Association, the City of Armadale and the City of Joondalup.

A spokeswoman for the City of Armadale confirmed they were in discussions with Cleanaway about varying their waste disposal contract.

"The city is contracted with Cleanaway till the end of June 2018," she said.

"Cleanaway has requested a variation on the contract as a result of their market for recycled waste in China being under threat.

"The city has taken legal advice on the matter and has been in communication with Cleanaway and [is] currently awaiting their response."

The City of Joondalup responded to the ABC's inquiry saying it still had a processing contract in place with Cleanaway and the details of the agreement and negotiations are confidential.

The City of Wanneroo could not be reached.