The contractor employed to knock down the Hunter Street Mall car park on King Street has discovered asbestos in the subsoil of the car park as well as ground-level high voltage electricity cabling, which would cut the power to a "significant part" of the CBD and East End if severed.

The unexpected issues have exploded the cost of the project from $3.37 million to $6.97 million, Newcastle council has confirmed.

Council accepted a tender midway through last year to demolish the 62-year-old seven-storey car park, which was closed in March 2020 due to structural concerns.

The demolition will make way for a "grand staircase" linking the harbour with Christ Church Cathedral.

Works began in September to knock down the parking structure and were initially expected to take four months.

A City of Newcastle spokesperson said the problems were discovered through a detailed investigation of the site and were a "frustrating aspect of working with aging infrastructure" that need to be dealt with for safety reasons.

"The contractors identified asbestos within subsoil of the car park to a depth of 1.5m, which means that approximately 3,250 tonnes of contaminated soil, the equivalent of 76 B-double truckloads, now needs to be removed to enable demolition to proceed," the spokesperson said.

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"Contractors also discovered the high voltage electricity cabling installed in 1961 sits at ground surface level rather than 0.9m underground as required.

"Severing these cables would lead to the loss of power for a significant part of Newcastle's CBD and East End, and City of Newcastle needs now to construct an inverted concrete culvert structure to protect the live cabling throughout the demolition process."

The car park is currently wrapped with stretch plastic to create negative air pressure in the structure and help in the removal of asbestos matter. Council anticipates the hazardous materials will be removed from the site by March, with works to be completed by the end of June.

The council remains in talks with Iris Capital, the company behind the surrounding EastEnd residential redevelopment, about incorporating the car park site into its plans.

"We hope to have an important update in the next few months on protecting the view corridor as part of their Stage 3 development," the council spokesperson said.

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