Supermarket giants Coles and Woolworths have been ordered to dump more than 5,200 tonnes of soft plastic – currently being stored at warehouses across New South Wales – into landfill.

The NSW Environment Protection Authority is concerned that huge amounts of soft plastic are being dangerously stored at 15 locations due to the suspension of botched recycling initiative REDcycle.

REDcycle announced in November that it would pause collections at Woolworths and Coles after reports it was stockpiling plastic rather than recycling it.

The NSW EPA clean-up orders, first reported by the Sydney Morning Herald on Friday, were issued on 31 January. The cost of removing the soft plastic is estimated to be $3.5m.

The NSW EPA has asked supermarkets to either dispose of the waste in landfill, reprocess it, or export it internationally. Landfill is the only viable option as other nations are unwilling to accept contaminated soft plastic and that volume of plastic cannot be reprocessed domestically.

Of the 15 locations, 11 are of such a concern that the EPA has notified Fire and Rescue NSW and has requested the operators take immediate action to mitigate risk.

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The EPA chief executive, Tony Chappel, said thousands of customers had diligently collected soft plastic and dropped them at local supermarkets because “they trusted their waste would be diverted from landfill and recycled”.

“The extent of soft plastic waste sitting in warehouses across NSW is very concerning and I know customers will be disappointed,” Chappel said.

“These stockpiles are stored from the floor to the ceiling, blocking entryways and preventing adequate ventilation with the soft plastic estimated to fill about three-and-a-half Olympic-sized swimming pools.”

Coles and Woolworths have six days to respond to the EPA’s clean-up orders.

A Woolworths spokesperson said the company was surprised to receive the notice as REDcycle had indicated they had plans to deal with the stockpiles.

A Coles spokesperson said the company was disappointed by the notice and was determined to find “a short-term solution” to allow recycling to return.

Chappel said it was unfortunate the plastic would now be redirected to landfill but “regulatory action had to be taken to protect NSW communities”.

“Our largest retailers have an important role to play in how we continue to reduce plastic waste and we are committed to working together so we can support opportunities and minimise risk,” Chappel said.

In a statement REDcycle said it remained committed to reinstating its plastics recycling program.

“REDcycle remains committed to continuing our important work and in reinstating our soft plastics recycling program. We have been in intensive roundtable discussions with our industry stakeholders and funding partners to explore a range of long-term and sustainable solutions following the halting of the program late last year due to supply chain disruptions,” it said.

In December, the Victorian EPA found half a billion plastic bags meant to be recycled in at least six warehouses in Victoria, posing potential fire risks.

The 3,000 tonnes of soft plastics were found during an examination of the REDcycle program in Victoria.

Later in December, the Victorian EPA said the operators behind REDcycle, RG Programs and Services, had failed to provide information about the locations of warehouses secretly stockpiling hundreds of millions of bags.

The federal environment minister, Tanya Plibersek, has previously called on Australia’s two biggest supermarket chains to come up with a “viable solution” after they were forced to hit pause on the recycling scheme.

Last year, REDcycle said the two companies that took the recycled material couldn’t accept any more, with a fire in a factory and “downturns in market demand” blamed.

“Due to several unforeseen challenges exacerbated by the pandemic, REDcycle’s recycling partners have temporarily stopped accepting and processing soft plastics. This combination has put untenable pressure on the REDcycle business model.”