Breakthrough site laying waste to toxic leftovers

Rising environmental pressures are driving a new waste facility

The owner of the nation’s first geological repository facility for storing toxic waste is tripling capacity at its flagship project in Western Australia, as pressure intensifies on companies in the mining and infrastructure sectors to consider environment, social and governance issues (ESG) in waste management.

Toxic waste storage company Tellus Holdings, backed by Hong Kong credit investor Tor Investment Management – a leading bondholder in Virgin Australia before it collapsed last year – is dramatically expanding its first geological repository at Sandy Ridge, north of Kalgoorlie.

Unlike traditional landfill that relies on a protective barrier or liner to prevent groundwater contamination from waste, Sandy Ridge relies on a natural safety case for waste storage using a 70million-year-old kaolin clay bed.

The waste cell is totally enclosed by one of the largest air domes in the world, which ensures it remains dry.

Sandy Ridge opened earlier this year and is licensed to accept Class IV and Class V hazardous waste in any form whether it be liquid, sludge, or solids. The initial licence to accept up to 100,000 tonnes per annum for the next 25 years is now set to increase to 280,000 tonnes.

These types of geological repositories are widely used in the US and Europe but Sandy Ridge is the first in Australia.

“Hazardous waste is truly a major issue for infrastructure,” Tellus chief executive Nate Smith said. “We create more waste per capita than any country on the planet. Almost 8 million tonnes per annum. That is excluding mine stockpiles that are many years old.”

Tellus, an unlisted public company, is chaired by Phil Garling, a former global head of infrastructure at AMP Capital Investors.

“There have been a few early adopters of Tellus that have chosen our solution because of the ESG issues for them,” Mr Smith said.

“But they are still a minority. The part missing in the ESG discussions is waste management. You can’t credibly talk about sustainability without talking about the material amount of waste produced. A sincere ESG focus should cover an entire cycle of a company, including waste.”

In August, tolling giant Transurban revealed a $3.3bn blowout in the cost of building Melbourne’s troubled West Gate tunnel project because of delays caused by a dispute over the disposal of toxic soil.

The process of mining lithium to meet soaring demand globally for batteries, especially those being built for electric vehicles, is also facing environmental challenges due to the threat of contamination of surrounding soils.

Tellus has started offering clients Tellus Permanent Isolation Certificates, which remove remediation liabilities from a company’s balance sheet.

Under accounting standards, a company that produces hazardous waste needs to make a financial provision for it.

The issue has come to the fore in the petroleum sector as oil and gas companies come under pressure to reveal more detail of their liabilities to clean up offshore facilities.

A federal government-funded report released in March found the total industry bill for decommissioning oil and gas rigs in Australian waters would soar to more than $50bn by 2050.

One of the waste streams in Australia that requires more sophisticated and sustainable disposal solutions is what’s known as disused sealed radioactive – non-nuclear – sources (DSRS).

This includes disused MRI and X-ray equipment that sits in storage at many hospitals around the country.

Tellus is believed to be in advanced negotiations to receive approval to entomb DSRS and other low-level radioactive waste inside its repository.

This would represent the first local solution in Australia for DSRS waste, which is now either shipped offshore for disposal or continues to sit idle around the country.

Sandy Ridge is licensed to accept DSRS waste above ground. and Mr Smith said Tellus had already taken a shipment of contaminated material with naturally occurring radioactive elements.

“It has been great for our company to begin gaining traction with large producers and government,” he said.

“From every state and territory, we have something in the pipeline now. The market is beginning to understand that our repository is a solution needed to enable economic development safely.

“The biggest uplift for Tellus is when the public perception comes around on this.

“I see us as a company 10 times our current size eventually. Because the problem is so large, it needs a broader solution.”

Earlier this year, Tellus approached credit investors and alternative investment firms seeking to refinance $135m in loans, including capital due to US distressed fund operators Anchorage Capital Group and CarVal Investors.

The auction was won by Tor Investment Management, an alternative credit manager focused on the Asia-Pacific markets with over $2bn under management, further supported by an undisclosed global institutional investor.

Of the raising, $110m was to refinance existing debt and $25m was for growth capital.

The new deal has eliminated refinancing risks that allowed Tellus to focus on accelerating the ramp-up at Sandy Ridge and capitalising on its pipeline of growth opportunities.

These include natural waste storage projects at Blue Bush in NSW and Chandler in the Northern Territory, each chosen for their dry and stable footings.

“Chandler is a deep salt mine. It is just a geological marvel. It is an underground salt sea the size of Sydney Harbour, 300m below the surface,” Mr Smith said.

He said Sandy Ridge was only launched after years of community consultation to ensure social licensing for the project.

“We had to seek approvals at three levels of government. These processes could certainly be streamlined, but I have been appreciative of the focus the governments have given us to helping launch our site and we have appreciated the additional scrutiny, because it has enhanced our project,” he said.

Tellus is now fielding inquiries from potential investors, including several wealthy family offices.

Mr Smith said the company would be open to raising equity capital, especially partnering with a strategic shareholder.

While he said it was too early to talk about a sharemarket float, it could be an option for the company in the next few years, as well as a trade sale.

Mr Smith joined Tellus in 2019 as general counsel and corporate secretary. Just over a year later he became CEO when the founder of Tellus, entrepreneur Duncan van der Merwe, announced his resignation as managing director after 11 years with the company.

“I count him as a mentor … He is still our second largest shareholder,” Mr Smith said.

Mr van der Merwe now runs the Sydney-based VanDyson family office, which earlier this year established a philanthropic vehicle the VanDyson Marine Fund (VMF) that supports businesses, organisations, charities, NGOs, academic institutions and individuals working on marine projects involved in the blue economy in Australia and the Pacific Islands.

‘Hazardous waste is truly a major issue for infrastructure’

The Australian
By Damon Kitney
16 November 2021

© 2021 The Australian Newspapers

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Christopher Chan
Christopher Chan