Chemical company Orica will spend nearly $50 million cleaning up its contaminated Botany site after it was handed an order by the state's environment regulator.
The EPA has issued a variation to Orica's Environment Protection Licence to allow the remediation work to take place.
It follows a series of toxic mercury leaks from Orica plants and concerns from local residents about contamination at Botany.
The EPA has given Orica until October 2013 to remove the most highly contaminated soils from its former ChlorAlkali Plant inside the Botany Industrial Park.
It will also be required to cap and contain any remaining contaminated soils by January 2015, and provide regular reports to an EPA-accredited auditor.
Orica will begin on the work this month, which is expected to take two years to complete, a spokesman for Orica told AAP.
It will cost the company in the order of $47 million.
The company's general manager of environmental remediation, Bill Crowe, said although there were no "unacceptable" human health or environmental risks posed by mercury contamination, the company was pleased to start addressing it.
"Orica is committed to ensuring its approach is scientifically rigorous, transparent and adheres to the highest standards of environmental control," Mr Crowe said.
EPA's Craig Lamberton said it was good news for the Botany community, which wanted assurance that environmental and health risks from past industrial practices will be minimised.
"The primary objective of the Management Order is to set out an appropriate framework to achieve the required environmental and human health outcomes," Mr Lamberton said.
Orica's Botany site was contaminated during the operation of a mercury-cell chlor-alkali plant by Orica and its predecessors between 1944 and 2002.
