BlueScope has been fined $15,000 by the Environment Protection Authority after contaminated water from the steelworks' coke ovens was released into a drain which feeds Port Kembla harbour.
It was the latest of several similar incidents over the past five years.
The recent incident, which occurred on April 17, was described by BlueScope as the overflow of a tank of Coke Ovens Gas (COG) condensate.
This, the EPA said, was caused by an operator leaving a water valve open, which allowed "up to 100 litres" of the condensate to flow into a stormwater drain.
Coke Ovens Gas is a byproduct of burning coal to form coke for steelmaking - it is largely water vapour but also includes volatile matter than was burnt off the coal.
It is likely to contain pollutants including benzene, methane, carbon monoxide, ammonia and toluene.
The EPA's director for regulatory operations Jacinta Hanemann said sampling of the spilled COG condensate by Bluescope revealed the presence of harmful pollutants.
"Spilled COG condensate has the potential to cause environmental harm because it contains concentrated and harmful pollutants," Ms Hanemann said
"In isolation, this incident would be not be considered environmentally significant, but over the previous five years, the EPA has responded to several similar incidents. Furthermore, this incident was preventable.
"Having regard to the preventability of the incident, the repeat nature of the incident and the potential for environmental harm, a penalty notice was considered the appropriate regulatory response.
"Licensees must comply with the requirements of their licence. Furthermore, the community rightly expects licensees to have adequate procedures in place to ensure they maintain appropriate environmental controls."
BlueScope said no EPA licence limits were exceeded for any contaminant at the licensed discharged point, and the dilution ratio with water in the stormwater drain was equivalent to 1 part contaminant for every 2.4 million parts of water.
"On this day, on this shift, human error triggered this regrettable event," BlueScope general manager of manufacturing Dave Bell said.
"It was a simple mistake by one employee unintentionally not shutting a water valve properly on a collection tank. BlueScope is committed to doing everything it can to avoid a repeat of this incident.
"BlueScope had already, well before this incident and the EPA's issue of a Penalty Infringement Notice and $15,000 fine today, committed to investing approximately $1 million to upgrade coke ovens gas condensate management site-wide. This upgrade limits the chance of any future mistakes from human error.
"BlueScope has identified the installation of automated remote level transmitters and alarms as the control measure to prevent the overflow of contents from collection tanks. Remote monitoring via level transmitters allows for alarming, trending, and immediate response.
"Whilst we will continue to supplement the new monitoring technology with regular manual inspections of collection tanks by our people, this new technology will be commissioned and operational at the collection tank in question within the next few weeks (end June 2021)."
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