Australia's oldest unresolved Aboriginal land rights claim is facing a huge asbestos problem which the Government says will cost almost $32 million to clean up.

The Kenbi land claim was lodged in 1979 and 36 years later has still not been fully resolved.

The claim covers the Cox Peninsula, west of Darwin, which had been used by the Commonwealth Government for over 70 years for communications and defence purposes during WWII, with a lighthouse and other government buildings spread over 4,750 hectares of land.

A report by the Department of Finance submitted last month stated that buildings and their surrounding areas on the land are harbouring dangerous levels of asbestos, pesticides, heavy metals and other toxic pollutants, which "pose a significant risk to human health" and represent a "liability for the Commonwealth".

The area has also been used as a dump for decades, with building debris from Cyclone Tracy in 1974 being offloaded there.

Indigenous elder Tibby Quall, who lives near the Cox Peninsula, said he had never been told by the government or the Northern Land Council (NLC) that the land was polluted.

Cox Peninsula Land Claim: The Kenbi land claim was lodged in 1979 and is Australia's oldest unresolved Aboriginal land rights claim.

The Kenbi land claim was lodged in 1979 and is Australia's oldest unresolved Aboriginal land rights claim. A Federal Government report highlighted the risk posed by asbestos and other chemicals to local bore water on land subject to the claim.

A Federal Government report highlighted the risk posed by asbestos and other chemicals to local bore water on land subject to the claim. The Government wants to spend $32 million to clean up the land and says this will be the final step before handing the land over to Indigenous traditional owners.

The Government wants to spend $32 million to clean up the land and says this will be the final step before handing the land over to Indigenous traditional owners. The Northern Land Council, which helps Aboriginal people manage traditional lands, says remediation works shouldn't hold up the claim, and land should be given back immediately.

"The Land Council has never said ... there is asbestos and it's polluted," he said.

"It's very sacred to us in this area. It's our land, our mother's land."

Both the Government and the NLC, which represents traditional owners, said they had consulted "key stakeholder groups" about the health risks.

Tibby's daughter, Sherana Quall, who lives in the area, said the news of the asbestos was deeply troubling.

"It's terrible because you can see the wind will pick up the soil, the wind will pick up the dust," she said.

"It'll carry into the community. If it's in the soils, it's going into the waters."

$32 million to store hazards on site

The old radio facility, pictured in 1966, situated in Section 34 of Cox Peninsula, an area subject to a land claim since 1979. ( Supplied )

The department asked the Parliamentary Public Works Committee to approve $31.8 million to store pollutants on site in "containment cells" rather than moved off site to be disposed of.

This represented a "significantly cheaper option" and would also provide employment for the local Indigenous population who could be involved in the clean-up, the department said.

A previous remediation project began in 2010, but was aborted after it ran over time and over budget.

As a result, some of the hazardous materials were placed in storage bags and put in some of the disused government buildings as a temporary measure.

Speaking in Parliament, Michael McCormack, the Parliamentary Secretary to the Minister for Finance, said the project "will address the risk of contamination to local bore water which supplies the local population", which the report notes is the "only drinking water supply to the population of the Wagait township, the largest permanent community on the Peninsula".

This map shows the areas around Darwin subject to the Kenbi land claim. Specifically the pink and orange shading define the land parcels.

"Once concluded, the project will enable the land to be transferred to the traditional owners," Mr McCormack said.

But the NLC said the clean-up should not stop the claim and the Government should hand the land back to the traditional owners first before negotiating a contract to deal with the hazards.

"We're saying to the Government there's other ways of doing it. Hand the land back, do the land claim, and we can lease it back to the Commonwealth," deputy chairman John Daly said.

Sherana Quall said the land at Cox Peninsula held a deep significance for her and she wanted to see the pollution dealt with correctly.

"It's where my ancestors come from. It's where my family are from. This place to me is like home. I've worked and travelled all around Australia, studied down south. This place is just my home.

"I think I'll probably want to die here".

Tibby Quall, too, wants to remain on the land and looks forward to building a future there once the land claim is settled.

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