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The Queensland Environment Department is investigating the Baal Gammon copper mine in north Queensland following the contamination of a local waterway.
According to the Courier Mail residents living near the mine have been warned not to drink the water from Jamie Creek after tests showed high concentrations of heavy metals.
The Baal Gammon mine releases water into Jamie Creek, but high metal concentrations have also been found upstream of the mine.
Environment Department north region services director Andrew Buckley told the Courier Mail the contamination was likely due to historical operations in the region.
"It is likely the elevated levels are due to the highly mineralised soil and rocks in the surrounding area and from historical activities in the catchment," he said.
Kagara executive general manager Joe Treacy said recent heavy rain had caused the problem, with tailings running from operations present before the company started in the region.
"There’s a significant legacy issue here going back 70 years. We’re confident it’s all contained" he said.
Treacy said the company had done as much remedial work as it could and while no contamination was acceptable the problem had been far worse before the company started work.