A $10 million lifeline will be thrown to the receivers of Victoria’s largest recycling processor, after the company went bust leaving behind tonnes of stockpiled waste.

The Andrews government will loan $10 million to the receivers of SKM to help pay for repairs and maintenance on machines at four sorting sites in an effort to prevent the refuse going to landfill.

A site at Laverton is expected to return to operation within five weeks, with the other sites at Coolaroo, Hallam and Geelong to follow.

“The priority is to clear those sites of the existing stockpiles and test the machinery to ensure that it is able to receive materials from outside of those sites,” Energy Minister Lily D’Ambrosio told reporters on Tuesday.

“There’s no point flicking a switch if there may be some failure of any of the machinery and at the same time receive waste that may not actually be able to be processed.”

SKM collapsed owing more than $100 million to creditors, and after a series of factory fires and government shutdowns because of stockpiling safety risks.

With contracts with 30 local councils, it is the largest recycling processor in the state.

Last week KordaMentha was appointed receivers and competitor Cleanaway acquired about $60 million of the debt, putting it in a position to take over SKM’s operations.

Ms D’Ambrosio said whoever buys the recycling processor will have to pay back the loan, but would not say whether they would have to pay interest.

The state government and local councils are also looking to trial increasing the number of recycling bins for household waste so there is less contamination, which happens in the current co-mingled system.

Opposition Leader Michael O’Brien said the government’s $10 million loan was “throwing money” at a problem rather than providing a solution.

The government also announced tougher penalties for operators who stockpile dangerous chemicals, including up to 10 years jail and $6.4 million dollar fines, in a bill to be introduced to parliament on Tuesday.

Victoria has had a series of fires in factories warehousing masses of toxic waste in recent years.

About 6.5 million litres of waste chemicals have been removed so far from three sites, while work at another 10 in Epping, Campbellfield and Craigieburn is ongoing.

-AAP