The proposal comes mere months before Orange City Council expects a final decision on the controversial Macquarie Pipeline.

Zeolite Australia’s Peter Rabbidge said his company approached the council four years ago when the town was subject to “fairly horrific restrictions” to propose using the volcanic rock zeolite to filter out the arsenic and cyanide in the water and supply it to Cadia, meaning Orange’s treated effluent could be returned to the town’s water supply.

But at the time it was howled down by the council.

Mr Rabbidge believes water from the mine, which was flooded in the 1930s, could be used by Cadia indefinitely for amenities and dust control, at no cost to the council as it is topped up by underground aquifers and springs.

“Millions of litres water is just sitting there,” he said.

“The arsenic and cyanide can be removed very easily, which would be a tremendous asset to the mine ... and it would free up extra water, which the residents could use.”

Mr Rabbidge said his company had the technology to modify the zeolite so it could be used to remove the toxins from the water.

“I’d be absolutely miffed if I was a resident of Orange and you’re being rationed for water when perfectly good water is being used for dust control at the mine,” he said.

“Rather than going to the expense of building a pipeline from the Macquarie Pipeline that’s going to cost Orange City Council millions of dollars, if they got the mine to take water from Lucknow the costs would be borne by the mine and not council.”

Council spokesman Nick Redmond said the council analysed a proposal to use the water for Cadia in 2009 but the water helped the mines retain their shape and kept them from collapsing.

But Mr Rabbidge said experts had refuted the claims.

Mr Redmond said the arsenic remained a problem, as was the long term impact on ground water.

“Ongoing, you could only take two megalitres a week so the volume of water is very small,” he said.

Mr Redmond dismissed Mr Rabbidge as attempting to spruik his product to the council.

“We get approached by people wanting us to use their products all the time and our analysis goes beyond whether the product is good or not,” he said.

Mr Redmond said water from the Macquarie River would not be given to the mine if the pipeline was given the go-ahead.

“The only agreement we have with Cadia is for effluent,” he said.

Mr Rabbidge said the Lucknow mine was privately owned, but the water resource was a community asset.

Zeolite is used to treat pool water and is also sold for desalination plants.

clare.colley@fairfaxmedia.com.au