Both parties have engaged legal representation over a 1998 deal that gave the mine free access to 13 megalitres of Orange’s treated effluent each day.

The confidential agreement stated Cadia Valley Operations would pay nothing for the effluent for the life of the mine.

However, Orange City Council believes the proposed $2 billion Cadia East project constitutes a new development and voids the existing agreement.

Cadia Valley Operations argues it should not have to pay for the effluent as the proposal is an extension of mining operations and is therefore within the parameters of the 1998 deal.

If the effluent supply was cut off or reduced the mine would be unable to meet its projected daily water requirement of 56 megalitres.

It is unclear how much money Orange City Council wants for the treated effluent.

The mine recently paid Central Tablelands Water $2190 a megalitre to access water from Lake Rowlands.

Both parties were yesterday unwilling to be interviewed on the matter but did release short statements.

The dispute between Orange and Cadia was raised during a forum on Wednesday evening where mine management addressed concerns about the environmental impacts of its expansion plan.

Water issues were the major concern of the 80 or so people who attended the meeting, including Greens MP Lee Rhiannon, her party will oppose the $2 billion Cadia East development.

Nearby landholders and conservation groups also expressed concern about the loss of 238 hectares of native vegetation and the formation of a 225 hectare subsidence zone.

Councillors Jeremy Buckingham and Neil Jones yesterday said they will move a motion at the next council meeting calling for a report to be prepared on the status of the effluent negotiations.

Both will push for the report to be made public.