The future $40 million plant was one of 22 projects across the state to be awarded joint funding from the Morrison and Berejiklian governments on Monday.

The $24 million to be distributed across NSW will increase the state's recycling capacity by 120,000 tonnes a year, and generate industry investment of $59 million, the federal government said.

"This is about easing pressure on our environment and taking responsibility for our waste by recycling more materials, creating more jobs and driving economic investment," Liberal Patron Senator for the Hunter Hollie Hughes said.

"I am delighted to announce that the Summerhill Waste Management Centre in Wallsend will be playing its part in transforming our recycling capacity."

Newcastle council has previously flagged its plans to build a materials recovery facility at the Summerhill tip following China's 2018 move to limit recycling imports.

It has aspirations for the waste management centre to play a larger role in increasing the Hunter's waste diversion and recycling.

An organics plant will soon be built at the site and if a materials recovery facility is constructed, Newcastle's red, yellow and green-bin domestic waste will be processed at the one location.

Newcastle council currently sends its recycling waste to the Central Coast for processing, while Lake Macquarie and Maitland councils' are sent to Sydney.

Ms Hughes said the state and federal governments had contributed $2.5 million each for the Summerhill materials recovery facility and industry would contribute a further $35.8 million.

"This is about easing pressure on our environment by recycling more materials including plastics, tyres, glass, cardboard and even coffee cups, and importantly it is about creating jobs and economic investment," she said.

"These new projects will help to boost our existing recycling capabilities, supportive innovative re-use of recycled materials and boost NSW's recycling capacity."

The council is yet to begin detailed planning and it was unable to provide a timeframe for the facility's construction on Monday.

"With the addition of our advanced organics recycling facility in 2021/2022 and our plans to establish a Materials Recovery Facility (MRF) at the site, the Summerhill Waste Management Centre has a key role to play in the region's move towards a circular economy and its ability to address future NSW and federal government targets on waste diversion and recycling," a spokesperson said.

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