Avenue Capital Group, which has links with North Sydney-based developer Clearstate, says it repeatedly approached the government about potentially buying land at the redeveloped smelter site before the sale of two parcels were announced on Friday.

Property Minister Melinda Pavey confirmed the sale of a lot to retailer Costco and another 55-hectare lot to residential developer Green Capital on site this morning.

But in a recent letter to the Hunter and Central Coast Development Corporation, ACG called for "all current negations" about the 55-hectare lot to be stalled so a "public and open process" could be conducted to ensure "absolute market value" for the land.

The firm told HCCDC it would be prepared to potentially offer "in the range of $32-38 million" for the lot, but it later became aware the sale was all but sealed with Green Capital.

ACG referenced previous valuations of the lot, between $14 and $18 million, that it believed were below market value.

The Newcastle Herald understands Green Capital paid more than that range.

ACG's concerns are tied to a $14 million loan that it says its subsidiary, Fiddletown Investments Limited, lent to the site's former administrator Ferrier Hodgson.

When the NSW government passed legislation last year to make a compulsory acquisition of the site after Ferrier Hodgson failed to advance land sales, the acquisition extinguished all interests in the site not recorded on land titles.

That included ACG's loan to Ferrier Hodgson, which it says was secured against the administrator's assets.

ACG says it was not consulted on the government acquisition and the subsequent loss of its property rights.

In a media release about the land sales, Minister Pavey said through the Lake Macquarie Smelter Site (Perpetual Care of Land) Act 2019, HCCDC had been tasked to progress land sales for business and residential development.

"The Act enabled HCCDC to direct deal with parties that had formerly been in negotiation or had entered into contracts with the site's administrator, to best achieve outcomes in line with our objectives for the site," she said.

At the on-site press conference on Friday, she said she was "confident" the government had secured market value for the two lots.

She said it had taken into account the "need for economic stimulus" and there had been a "good offer on the table" that would provide both short and long-term job opportunities and help fund the ongoing maintenance of the area's containment cell.

"We've seen a period of a decade where we had no activity and we don't want to return to that. We need to get moving," she said.

"We have taken market soundings and we're very positive about the position we've taken, that is why we're doing what we're doing.

"We're doing the deal to get the 200 Costco jobs and at least 400 to 500 jobs during home constructions because we need this activity now.

"We don't need to be caught in a quagmire. This is something the Lake Macquarie community have been calling for for too long."

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