TAMWORTH Regional Council is seeking out companies to process the region's recycling waste as its current deal with Cleanaway and Challenge draws to an end.
In May, council staff revealed no tenders to take up the services from July 1 next year had been received, sparking fresh negotiations with Challenge and Cleanaway.
However, the council's director of water and waste Bruce Logan said a mutually beneficial agreement between the parties had not been reached, prompting the council to look elsewhere.
"At the moment, everything that people put in their recycling bin is picked up by Cleanaway and is taken to Challenge's depot on Forest Road for sorting," Mr Logan told the Leader.
"We currently have a contract with Cleanaway, who has a contract with Challenge, which will end on July 1 next year and while we have engaged Cleanaway to pick up the garbage for the next seven years after that, we haven't got someone to process the recyclables.
"We need to find someone to do that and we've been talking to Challenge about continuing on after July 1 next year, but to date we haven't been able to reach an agreement.
"What the council has decided to do is to shelve Challenge's proposal, go out to the wider market and see what the other players in this area are offering."
Challenge CEO Peter Maher declined to comment on Friday when contacted.
Mr Logan said the cost of collection and processing may increase and the cost "may have to be" passed on to the ratepayer.
"Previously, we said to the company picking up the bins that it was their responsibility to find someone to process the recyclables and we are taking that off the new contract, and making it our responsibility to ensure we have greater control," he said.
"No one tendered for this part of the work, so now we are having direct conversations with interested parties starting with Challenge but now we're moving on to others.
"This industry is constantly changing and we expect it may possibly cost us more money than it has to date, but what we're looking at is what the industry is offering."
If the council is unsuccessful in striking a deal with a local processor, Mr Logan said there were contingency plans in place.
"There's a clause in the existing contract with Cleanaway that says if there is nowhere to take the recyclables, they have to take them," he said.
"Cleanaway have obviously got several plants across NSW and at this stage they may have to take everything to one of those plants.
"We'd obviously like to have another party in place and arrangement in place for July 1 next year."