Sources with knowledge of Costco’s plan to buy land from administrator Ferrier Hodgson told the Newcastle Herald on Tuesday the bulk retailer had walked away from the trading table.

It comes after the NSW Department of Planning said earlier this year Ferrier Hodgson could not subdivide the former lead smelter land – to sell part to Costco and Swedish furniture behemoth IKEA – until the administrator set up a trust fund for future monitoring and maintenance of an underground containment cell at the site, which holds hazardous material.

Read more: Government plans law change after Pasminco links lead monitoring to IKEA sale

As the Herald reported in July, Ferrier Hodgson said in an application to the department it first needed money from the sale of land to IKEA. But that sale could not take place until the subdivision at the Boolaroo site was complete. The application referred to $22 million it expected to raise from IKEA and $11.5 million from Costco.

A Costco spokesperson said on Tuesday the organisation was looking for potential store locations but had no site confirmed. 

An IKEA spokesperson said the business did “not currently have confirmed plans to open a store in Newcastle”. When asked to clarify whether it was considering buying part of the Pasminco site, the company did not respond.

Lake Macquarie MP Greg Piper said he was advised about two months ago that Costco abandoned its plan to buy Pasminco land, which was “a huge blow” to the region.

Read more: Pasminco says Boolaroo lead monitoring rests on $22m IKEA land sale

Mr Piper said Costco became frustrated that the subdivision had not been finalised, which he understood given the company operated in a “commercial reality”.

“The opportunity we had was very, very big,” he said. 

“I know they were genuinely keen to come here but being able to complete the acquisition of property was really important to them.”

Ferrier Hodgson would not comment on Tuesday. 

Nor would Peter Francis, CEO of Lake Macquarie council’s economic development organisation Dantia.

A council spokesperson said council was “proactively working with relevant state government agencies to ensure the site can reach its potential as soon as possible”.