The seaside town of Anglesea is a popular pit stop for those travelling along Victoria's Great Ocean Road.

It's picturesque, framed by national parks and the Bass Strait.

But a few kilometres up the Anglesea River and away from the bustling town centre lies a massive pit — a reminder of the town's former coal-fired power production history.

Alcoa's coal mine and adjacent power station opened in 1969 and supplied about 40 per cent of the Point Henry aluminium smelter's power requirements.

The Geelong smelter closed in 2014 and the Anglesea coal mine and power station subsequently shut down in 2015.

It's left behind a giant hollow which Alcoa plans to rehabilitate by filling it with about 18 gigalitres of water – the equivalent of 7,200 Olympic swimming pools – over seven to 10 years.

The mine operator aims to fill the pit with a combination of rainwater, groundwater and peak flows from a nearby creek to stabilise the mine, provide a firebreak for the Anglesea township and a source of water for firefighting.

In 2019, UK company the Eden Project proposed to take over the Anglesea mine site, with hopes of creating a world-class $150 million ecotourism attraction with 750,000 projected annual visitors.

Those plans have been put on pause for now, but the company said it remained in contact with Alcoa and planned to resume work "under the right circumstances".

Some locals fear plan will create a toxic lake and river

Friends of Anglesea River co-organiser Keith Shipton said Alcoa needed to thoroughly consider the environmental effects of its rehabilitation strategy given the acidity of the groundwater that would be pumped into the pit.

"Because the lake is 3.6 pH, it's a very acidic lake and at the moment, there's no plan to fix that," he said.

"So it will be, as far as I would understand, fenced off and far too toxic to be swimming in."

Alongside the acidity of the future pit lake, Mr Shipton said the community was also concerned about the effect of groundwater extraction on the pH of the Anglesea River.

Mr Shipton thinks back fondly on the days when fishers flocked to the town's river, known for its thriving fish population.

Since mining operations and groundwater extraction began in Anglesea, the river has had multiple episodes of fish kills, affecting thousands of fish, with the most recent events being in 2010 and 2022.

A study by the University of Melbourne and the Friends of the Anglesea River group highlighted the potential link between Alcoa's extraction of groundwater and the Anglesea River's prolonged bouts of acidification.

Alcoa has consistently refuted suggestions its activities in the area have contributed to the acidification of the river.

Conflicting views remain over mine's impact on local environment

Alcoa has submitted a groundwater licence amendment application with Southern Rural Water, requesting approval to pump 1.5 gigalitres of groundwater per year for 10 years from the Upper Eastern View Formation aquifer, to fill the mine.

Southern Rural Water refused Alcoa's previous application to extend its groundwater licence in 2022 due to insufficient detail on the sustainability of the water resource, impact on other users, and the impact of groundwater on environmental values including the Anglesea River.

"If Alcoa gets permission from the state government agencies to continue pumping from the aquifer, the river has no chance of recovery," Mr Shipton said.

"Alcoa will be long gone and we will be left with a problem which is a dead river here and an acid lake in our hinterland."

Southern Rural Water's managing director Cameron Fitzgerald said the organisation had appointed an independent panel of experts to assess the application, after which it would be released for public comment.

"So making sure that the long-term interests of the environment, of other water users, of the community, are well understood and that there are no unacceptable impacts associated with that," Mr Fitzgerald said.

A spokesperson for the Corangamite Catchment Management Authority said it was working with partners to explore solutions but there was no quick fix for treating acidity in the lower estuary of the Anglesea River.

Alcoa has denied responsibility for the acidification of the Anglesea River, previously citing climate change and the reduction in flow due to a drying climate.

"Investigations have indicated that the Anglesea River system is ephemeral and water quality is influenced by naturally occurring factors," an Alcoa spokesperson said.

University of Melbourne environmental geochemist Ralf Haese refutes this claim and attributes the acidification to a lowering of the groundwater level caused by Alcoa's groundwater extraction.

His report states the groundwater level continued to fall until pumping stopped in 2016, causing greater infiltration into the deeper sub-surface and reducing flows into nearby creeks.

The lack of flows meant any acid produced in the shallow sub-surface was no longer diluted, which could explain the prolonged periods of acidity.

"I do not think that the further production of the groundwater is beneficial to the environment or the local community," Professor Haese said.

He said even if Alcoa was granted a groundwater licence to fill the mine pit, the body of water would likely be closed off.

"This is a massive concern that we're creating deliberately an acidic lake, and this will not change in the near future, there's nothing which will turn that water neutral again," he said.

In an email to an Anglesea resident, seen by the ABC, Alcoa stated the pH level of the pit lake could improve depending on the fill strategy and on future investigations as part of the final Mine Rehabilitation and Closure Plan.

Alcoa stated the relevant authority managing the mine site would determine the future use of the water body.

Latrobe Valley locals face similar concerns

On the other side of Melbourne, the Latrobe Valley community is also familiar with the challenges posed by an old coal mine.

Plans there to transform the defunct Hazelwood coal mine into a pit lake larger than the Sydney Harbour have proved controversial with some.

Mine operator Engie is preparing an Environment Effects Statement for the state government on its $1-billion project to fill the pit with 725 gigalitres of water sourced from groundwater, surface water and excess flood flows from the Morwell River.

The plan is intended to guide the rehabilitation of the state's remaining three coal-fired power stations, which are set to close by 2047.

But environmental groups fear there will not be enough water available in local waterways to fill the mine over the coming decades.

"30 per cent of the Latrobe River flows coming from the Morwell River will be lost into the lake system," Friends of Latrobe Water secretary Tracey Anton said.

"It will be catastrophic ... it'll be a dying system and it'll be detrimental to the Gippsland Lakes.

"It's to be assessed under this [EES] process which we don't think is robust enough so we've contacted the federal government to make sure there's some greater assessment and oversight here."

Experts recommend reverting sites to their former land use

University of Melbourne senior lecturer in the school of geography, earth and atmospheric sciences Dr Tim Werner said across Australia smaller pits were commonly backfilled and revegetated, but rehabilitating larger coal mines was more complex.

"After the Hazelwood mine fire there was an inquiry looking at what do we do with these sites when they close, particularly to address this fire risk," he said.

"They concluded in the Latrobe Valley that we need pit lakes."

Dr Werner said sourcing the volume of water needed to fill some larger mine pits was challenging, particularly with the changing climate.

"The challenge is getting greater because of climate change, inducing greater drought or more water scarcity in the future," Dr Werner said.

"[Mine operators] might have plans for how much water is needed, what impacts there are going to be on ecosystems, but with increasing drought in future, your plans might no longer be accurate."

In Dr Werner's view, the best mine rehabilitation strategy is one that returns the area to its original land use.

He said a pit lake was a new ecosystem and landform that in many areas may not support life.

"For reasons of cost, those options are very often discarded," Dr Werner said.

"The other option is to let the pit fill just with rainfall, let it fill naturally over time, that's probably better for the environment."