Squadron Energy, Andrew Forrest's Port Kembla gas terminal company, wants permission to dump material it dredges from the bottom of the harbour offshore.
The construction of a new berth for gas tankers would require excavation and dredging, with a plan approved for the "spoil" to be deposited in an "emplacement cell" in the Outer Harbour.
Squadron says the dredged material which may be dumped offshore would be undisturbed natural clay and rock.
In a contingency plan described as a 'last resort' by Squadron the company wants offshore dumping to be available for 50,000 cubic metres in a 4 square kilometre location about 5km off the Five Islands. It would only be used if the cell is not large enough for what is expected to be dredged.
The emplacement cell is planned to hold up to 720,000 cubic metres of dredged material. About 600,000 cubic metres would be dredged, but may grow in volume - known as 'bulking" - when moved and rearranged.
Because it is potentially contaminated - Port Kembla Harbour has been historically polluted - the emplacement cell must be below a maximum of 0.9m Port Kembla Height Datum, with 1.35m of clean "capping" material on top of the dredged matter.
A Squadron Energy spokeswoman said the offshore site was a "last resort" and whether it would ever be used was "under review".
"The application for offshore relocation of natural materials recovered from the harbour floor is a last resort contingency only," she said.
"This is and has been the usual practice for clean material removed in infrastructure projects that involve dredging.
"Our original contingency plan was to relocate all materials to a safe purpose-built structure as part of the project. A decision on whether this last resort contingency would ever be used has been under review."
The Major Projects modification application for the offshore dumping was on exhibition in September and is now under assessment. An Environmental Impact Statement was prepared and approved for the gas terminal but offshore disposal was not included in the EIS.
Squadron, which was previously known as Australian Industrial Energy, has also applied for a Sea Dumping permit from the Commonwealth Government. The Department of Climate Change, Energy, the Environment and Water said its assessment was ongoing.
It would be the fifth modification sought for the project, which when approved by the NSW Government in 2019 as critical state significant infrastructure was valued as a $250 million investment.
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