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The Dunedin City Council has served notice of its intention to buy the Foulden Maar site near Middlemarch - and it may use the Public Works Act to force through a deal.
The move was confirmed by Mayor Aaron Hawkins in a statement yesterday afternoon.
Mr Hawkins said the council had yesterday served "notices of desire'' on the owner of the site, Plaman Resources Ltd, and moved to register the notices on the property's titles.
The notices, which could be served on the owner under the Public Works Act, triggered a process by which the two parties had to negotiate over a sale, and were the first step down a path which could end in a compulsory purchase by the council.
The step was being taken as liquidators for owner Plaman Resources Ltd prepared to sell the land, which has a mining permit.
Mr Hawkins said the aim was to return the site to public ownership and prevent any mining taking place.
The 23-million-year-old crater lake near Middlemarch was considered to contain a globally-significant fossil and climate change record.
It had been under threat since it emerged Plaman Resources planned to mine 500,000 tonnes of diatomite a year at the site, triggering outrage from neighbours and members of the scientific community.
The company was moving to buy a neighbouring farm, to expand its mining footprint, when when it was placed into receivership in June.
At the time, there were calls at a public meeting for the council to use the Public Works Act to acquire the site and prevent it being snapped up by another buyer with mining interests.
Mr Hawkins said the council's move to protect the site was important, given its importance to biodiversity, conservation and the study of the history of life, southern hemisphere biogeography and climate change.
"We know that the maar is considered by scientists to contain New Zealand's richest trove of fossils, including plants, insects, spiders, fish and pollen,'' he said.
"For these reasons, its important we act to preserve this very special place and prevent any mining taking place.''
The council now had to obtain a valuation and negotiate ``in good faith'' with the owner, he said.
If, after three months, the parties could not agree on a price, one would be determined by the Land Valuation Tribunal, he said.
If no agreement could be reached, the council would have one year to decide whether to proceed to a compulsory purchase, he said.
Save Foulden Maar committee member Andrea Bosshard said her group was ``thrilled'' with the announcement by the council.