The South Australian government will loan $3 million to a local plastics recycling business to ease the stress of kerbside collectors.
The money will boost the redevelopment of the Recycling Plastics Australia business in Adelaide into an export-ready facility.
RPA processes low-grade waste and turns it into granules which can be reprocessed into industrial products.
The funding will be added to RPA's $9.5 million investment in advanced manufacturing and sorting equipment.
General manager Stephen Scherer says China's ban on taking recycling from Australia has put the kerbside collection system and recycling under extreme stress.
"This initiative provides an outlet for 25,000 tons of mixed plastic that's been stockpiled or landfilled," he said.
China's ban limited the type and quality of plastic it accepted.
But the state government said the South-East Asian market had a shortage of certain plastics as raw materials.
RPA aims to reprocess waste plastic into those raw minerals in a market-ready form.