In what both men describe as the biggest projects of their careers, Jeff McCloy and fellow developer John Stevens have teamed up to transform Hydro’s Kurri Kurri smelter site into industrial estates, a business park and a new suburb called Loxford Waters. While the residential side could include more than 2000 homes, substantial parts of the 2000-hectare site will be kept as environmental and buffer zones. Demolition has almost finished on the smelter, which closed in 2014, and Hydro is finalising remediation plans.

Developers Jeff McCloy and John Stevens have teamed up to take over the redevelopment of the Kurri Kurri smelter site, with plans for industrial estates, a business park and a new suburb called Loxford Waters. Planning for the 2000-hectare site has been under way since the smelter ended operations in 2012 and shut permanently in May 2014.

With direct access to the nearby Hunter expressway – which opened two months after the smelter shut – reuse of the site is viewed as imperative by planners if Kurri is to recover some of the economic momentum it lost along with the 600 jobs left at closure time.

Although the exact details will not be finalised until further along the approvals process, the basic plan is to use the former smelter footprint for two industrial parks, with a business park on the other side of the Hunter Expressway, next to the Hart Road overpass and site entry.

The new owners are hoping to build more than 2000 residences, with access to the new Loxford Waters suburb from the north-eastern or Gillieston Heights end of the site, with a first entry to be built off Cessnock Road.

They say high-voltage power infrastructure installed with the smelter – which consumed about 6 per cent of the state’s power in its day – makes the industrial land ideal to include power generation, either for a solar farm or a gas peaking plant.

Rezoning documents show a series of seven residential areas, running in a south-west to north-east direction along the old South Maitland railway line.

Mr McCloy describes the project as the biggest of his career – as does Mr Stevens, whose Central Coast company, the Stevens Group, has become a major player in the Hunter Region, with various residential projects including The Vintage at Rothbury and the recently started Foreshore Apartments at Toronto, as well as commercial work for shopping centres and major retailers.

Hydro Aluminium managing director Richard Brown is similarly happy with news that the site is set to transfer to new owners.

“We have been concentrating on demolition and remediation for a long time now, so are pleased to be able to progress to this stage, where parcels of land can be developed and Kurri Kurri can start to see economic benefits again.” Mr Brown said.

“We are mindful that the closure of the smelter in 2014 was a loss to the local community, and we are keen to see the local economy regrow, particularly with the promise of more jobs for the area.”

Neither side would put a value on the transaction, but Mr Brown said it would cost Hydro more than $100 million to demolish the smelter and remediate the site, including the likely cost of a “remediation bond” or similar guarantee to cover any future environmental costs.

Although 20 years have passed since the Newcastle steelworks was shut, the figure is in line with the $100 million that BHP said was spent on shutting the Mayfield plant and remediating the site (although not the Hunter River, which cost substantially more).

Kurri smelter’s major environmental legacy is a hazardous waste known as “spent potliner”, which is stored in two areas on the site.

From the smelter’s opening in 1969 until 1993, spent potliner was stockpiled east of the smelter in an area known as “Mount Alcan”, after the smelter’s original operator. Hydro proposes shifting this material to an area known as the “clay borrow pit” on the other side of where the potlines had stood. This is where clay had been dug to cover waste on Mount Alcan. Now, the pit would be converted into a heavily lined “containment cell” and covered for permanent storage.

From 1993, spent potliner was stored in sheds. This material was recycled on site between 2001 and 2016 by a contractor, Regain Services, which now operates from the Tomago smelter site. Mr Brown said about 15,000 tonnes had been recycled so far. The plan was for Regain to continue trucking the material to Tomago, taking between two and three years to finish the job.

The Norwegian-owned Hydro had originally announced a sale of the Kurri smelter site in August 2018 to a private water and power company – Flow Systems – which lists the Huntlee estate near Branxton and Watagan Park at Cooranbong as two of the NSW “communities ” it supplies water to.

But that deal fell over within months when Flow Systems was put into voluntary administration by its biggest shareholder, the Canadian-based global asset manager Brookfield.

Mr Brown said Flow Systems going into voluntary administration was “a shock to us but we re-evaluated our options” and went with the Stevens/McCloy joint venture.

Shane Boslem, a McCloy Group employee who is project director and spokesperson for the redevelopment, said the joint venture would have been the residential developer working with Flow Systems had it not gone into voluntary administration.

“Their expertise was as a private water company, and also looking potentially at the power supply for the site,” Mr Boslem said.

“They had looked to us for experience on the development side of things.”

Mr Brown said Hydro went back and looked at the various expressions of interest lodged when the site was first offered for sale, before renegotiating a deal with the Stevens/McCloy group.

Records show that the demolition, remediation and re-use of the site is subject to a range of NSW government and local council approvals, with the smelter site straddling a border between the Cessnock and Maitland local government areas.

To coincide with the sale announcement, various MPs and council representatives were given a tour of the site yesterday morning.

Demolition began in April 2017, with head firm CMA Contracting having done about 80 per cent of the work.

The smelter’s distinctive exhaust stacks were knocked down in May 2019.

Mr Brown said NSW government approval for the remediation program was “close to completion” and Hydro had awarded the remediation contract in December to Hunter firm Daracon.

He believed the “the first steps towards residential development ” would be under way within six months of a NSW government “Gateway” determination on rezoning, which was expected towards the end of this year.

“Gateway determination requires several issues to be resolved before the rezoning of business and industrial land around the smelter, and the residential land along Cessnock Road from Gillieston Heights can be approved,” Mr Brown said.

“The councils will exhibit the rezoning plans and seek feedback from the community.”

Mr Brown said a biodiversity assessment was under way and a substantial amount of the site will become “one of the largest conservation areas in the Lower Hunter through a biodiversity stewardship agreement”. He said a 12-person community reference group representing the two councils, community groups and local residents had been “a great sounding board” for the project, meeting 36 times since it was formed in 2014. Group member and Kurri Kurri District Business Chamber president Kerry Hallett said the smelter closure had coincided with a coal industry downturn, and a regional unemployment rate of 16 per cent. Ms Hallett said the Kurri community welcomed the jobs and business that the project would bring, while at the same time wanting to know that the spent potliner to be stored on site would be safely managed.

The NSW Department of Health is among those backing Hydro’s “containment cell” in submissions to the planning department. However, others, including a University of Newcastle research fellow whose PhD on “the remediation of fluoride and cyanide from spent potliner contaminated groundwater” followed investigations at the Kurri site, fear the cell will eventually fail. Hydro is preparing its response to these submissions.

The environmental concerns do not appear to bother the joint venture partners, with Mr McCloy saying he had “read all of the reports” and considered it a “low grade” risk.

Both sides confirmed the sites environmental responsibilities are likely to shift to the new owners, but arrangements were yet to be finalised .

Both he and Mr Stevens said the pace of the project would depend on the demand for the various types of land.

Mr McCloy said the residential development would have the same sort of emphasis on public art, recreational areas and design quality as McCloy Group’s recent residential developments at Teralba, Medowie, Raymond Terrace and Rutherford.

Mr Stevens said the Hydro site was one of the most strategic in the Lower Hunter.

“It’s not just a large block of land, it’s got the freeway running right beside it and it fits right into government and local council strategic growth plans,” Mr Stevens said.