Asbestos danger signs have been placed around the boundary of a huge bushland buffer next to the old Munmorah Power Station site.
The area includes land earmarked for the Colongra Sporting Complex, for which the Minns government has committed $6 million.
The NSW government-owned company that owns the site, GPM (Generator Property Management), confirmed it erected the asbestos signs.
GPM managing director Stephen Saladine said the company found "illegal dumping of building waste" in bush "to the south of the site".
"Isolated samples of bonded asbestos have been identified. There has been no friable asbestos identified at this stage and investigations are continuing.
"In the immediate areas of the larger dump sites, soil testing is being undertaken to determine if asbestos fibres are present in the surrounding soil. These results are not yet available."
He said there was "no asbestos dump".
"The issue is randomly placed piles of building and household waste."
Mr Saladine said people had entered the fenced property to "dump the material".
Asked if the asbestos would be removed, he said GPM would discuss with the NSW Environment Protection Authority "what steps to take once a full and thorough investigation of the whole area is completed".
But this would depend on the "extent of any problem" and whether "protected vegetation" was affected.
"It is intended to make the area safe if possible, otherwise it may be capped," he said.
Asked if the asbestos posed any health risks, Mr Saladine said "there are no risks to people in the area outside GPM boundaries".
A NSW EPA spokesperson said "GPM has proactively engaged a suitably qualified consultant to investigate the extent of the suspected asbestos dumping".
"This work includes preparing a management strategy to remove and legally dispose of the asbestos waste," the spokesperson said.
EPA officers had investigated the affected area "during a routine inspection".
The EPA spokesperson added that GPM had "recently notified the EPA that suspected asbestos-containing material had been illegally dumped by trespassers".
"The officers observed small fragments of bonded asbestos, mixed in with other illegally dumped material distributed through the bushland," the spokesperson said.
"It is largely covered by leaf litter and is closed off to the public. Risks are exceptionally low if bonded asbestos remains undisturbed."
Planning documents show the power station site covers about 940 hectares, including 200 hectares used by the old coal plant and the rest forming a buffer to residential areas.
GPM erected signs and fenced the buffer area to warn people "who cut fences to access the property that there is a potential issue with asbestos".
It had advised Central Coast Council of the illegal dumping.
The council leases the two-hectare site earmarked for the sports complex from GPM. It resolved last October to compulsory acquire the land.
Construction of the complex had been due to occur in the "second half of 2024", but the council slightly changed that wording yesterday to "next financial year".
GPM said if the council found any contaminated material on the sport site, it would be removed during major earthworks for the complex.
The council said it was "finalising the land purchase" and "will consider the cost of any clean-up when negotiating the sale price, if this parcel of land has any contamination identified on it".
The Munmorah coal-fired power station was originally constructed in the 1960s and operated until 2010.
The twin 155-metre high chimney stacks were demolished in 2017, with the remainder of the plant demolished in 2018.
The Newcastle Herald reported last week that the EPA had declared the former power station site to be contaminated land.
This was due to the detection of PFAS (per-and polyfluoroalkyl substances) associated with a former firefighting training area on the land, along with hydrocarbons.
The contamination notice and clean-up work will not affect construction of the Waratah Battery on the site.
