The company, known as MM Kembla, risked polluting the beach which takes its name.

The substance was described as a "light non-aqueous phase liquid" (LNAPL), a term for a petroleum hydrocarbon liquid that has leaked into the ground, likely to be trichloroethene.

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"The location of the area where the LNAPL has been identified on the premises indicates the potential for LNAPL and dissolved phase petroleum/chlorinated hydrocarbons to migrate offsite to MM Beach and the South Pacific Ocean," the EPA wrote.

A report by MM Kembla confirmed this.

"It is considered likely that LNAPL and dissolved phase petroleum and chlorinated hydrocarbons have and are migrating offsite," the MM report, quoted the EPA, said.

MM Kembla executive director Tony Bova told the Mercury the groundwater monitoring which found the LNAPL was "over and above" the requirements of its pollution licence.

"This work identified the presence of a light non-aqueous phase liquid in two groundwater monitoring wells located close to the eastern boundary of the Port Kembla site," he said.

"MM Kembla self-reported our findings to the EPA.

"An investigation into the contamination could not identify any obvious source, for example leaks or spills, and all drains are clear. There is no evidence of any flow into the ocean. MM Kembla is working closely with the EPA on this matter and following all EPA directions."

The EPA notice said concentrations of trichloroethene reported in the groundwater samples exceeded the protection level default guideline value for toxicants.

"The LNAPL and dissolved phase petroleum/chlorinated hydrocarbons have or are likely to migrate off the premises to MM Beach and the South Pacific Ocean which is likely to cause water pollution," it said.

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