Port of Newcastle has ruled out using the Carrington pump house to display the Newcastle Maritime Museum collection.
The iconic building has been suggested as a potential new home for the museum since it was forced from the Honeysuckle A-Shed in 2018.
The City of Newcastle and Newcastle Maritime Museum Society remain in discussions about how the 7500-piece collection can be preserved and displayed.
Meanwhile the City of Newcastle is keen to incorporate key items from the collection into the Newcastle museum display.
The Port of Newcastle is wrapping up work on the latest $850,000 stage of the pump house restoration. It is considering funding options for the building's interior restoration.
Among the options that have been put forward for the building's eventual reuse are a bar and restaurant precinct.
A Port of Newcastle spokeswoman said the maritime collection was not considered compatible with the building's future use.
"There is an extensive restoration underway and it will be some time before the building is fully restored to return this iconic piece of Newcastle and the port's history to active use," she said.
"As a port city, Newcastle and the Hunter have a rich maritime history which is to be celebrated. Unfortunately, the port does not have any suitable facilities to preserve or house any type of museum collection."
Meanwhile, Thales, which has provided free storage for the collection since September 2018, has advised that it will not be able to extend its offer beyond this year.
A City of Newcastle spokeswoman told the Newcastle Herald the Newcastle maritime museum society, which remains several thousand dollars in debt, had assured it that it would find an alternative storage location for the collection.
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"City of Newcastle has offered to exhibit at the Newcastle Museum a limited component of the maritime museum's collection so that it is available to the public to experience," the spokeswoman said.
"We also committed that any donated items could be returned to the society without fee should they at a future time secure funding and a site for a standalone museum. City of Newcastle put this offer to the society at the start of April via a draft Memorandum of Understanding. We are currently waiting to hear back from the society whether it is something that they wish to progress."
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