With the significant volume of construction and demolition (C&D) waste produced by the global building and construction sector, there are calls for action to enable more circular practices in the sector. Local collaboration has emerged as a practical approach for local stakeholders to work together and utilise waste resources that are generated, recycled, and supplied within a certain region. While there is extensive research on the proximity principle and its benefits on the environment and economy, limited case study examples are modelling circular economy practices through the use of products with recycled content (PwRC) and local collaboration. The study aims to identify the key challenges and drivers for using PwRC in construction projects, drawing on a local collaboration case study from Perth, Australia. The study identified 13 key challenges that can be categorised under ‘physical characteristics of the project’, ‘project management’, ‘supply chain’ and ‘policies and regulations’. Furthermore, four driving forces for optimal use of PwRC through local collaboration were found to be ‘government sustainability commitment and demonstration’, ‘sustainability recognition at the project level’ and ‘policies and regulations’. The lessons learned through this demonstration case study provide insights for practitioners and decision-makers in the sector to move away from the traditional “take-make-dispose” paradigm. It also helps stakeholders deepen their understanding of best waste management practices, improve planning for future projects, align with global efforts to advance circular economy principles, and contribute to achieving broader sustainability goals. Lastly, the case project is a good example of the practical application of the urban mining concept in the waste management context.