The potentially dangerous chemical being stored in the former Mataura paper mill will not be moved any time soon, after a deal to move the dross was turned down.
As the floodwaters rose around Mataura last Wednesday, widespread evacuations were ordered.
Many residents believe it was due to the threat of water mixing with ouvea premix stored in Mataura's disused paper mill and letting off a cloud of ammonia gas.
Almost 10 tonnes of the hazardous waste from Tiwai Point's aluminium smelter is stored in the mill.
Last week, Gore District Council said it had managed to reach a handshake deal to get it moved from Mataura to Tiwai Point, but that agreement was overruled by Rio Tinto, majority owners of New Zealand Aluminium Smelters.
Gore District Council chief executive Steve Parry said he was devastated by the turn-around.
"It was agreed by the three people in that room including [New Zealand Aluminium Smelters chief executive] Stewart Hamilton that I would make the statements that I did and we went through the points," Mr Parry said.
"And it was agreed, that in the public interest, we should make a statement as opposed to saying we are in negotiations and there are no details we can give you."
Mr Parry characterised the agreement as a handshake deal, which he was informed by Mr Hamilton had been vetoed by Rio Tinto.
"I'm quite keen to get that dross out of there, it's a very big concern to the community in Mataura," Mr Parry said.
"So to find that you've been pipped at the post by superiors who don't see the need to act with urgency and don't see the need for them to be further involved in providing a solution is devastating and very disappointing."
Mr Hamilton was not available for an interview today but in a statement said: "We have fully cooperated with Gore District Council regarding the council's long-standing plans to remove the material that is stored at the Mataura Paper Mill.
"We remain committed to a solution that removes the material. NZAS has committed to contributing $1.75 million to the costs of safely removing and processing the material."
A Rio Tinto spokesperson asked for any questions for Mr Hamilton to be emailed through after earlier attempts to contact him were rebuffed, however, the statement did not address RNZ's queries as to whether a handshake deal took place, what Mr Hamilton's version of events was if it was in conflict with Mr Parry's and whether anything was being done to expedite the removal of the dross following last week's floods.
The dross was moved into Mataura's disused paper mill, as well as other sites around Southland, by Taha Industries in 2014.
That company went into liquidation in 2016 and the dross sat in the factory until a deal was cut last year between the Government and local councils to move the product over six years.
Gore District Mayor Tracy Hicks said he was gutted at what had transpired.
"It's something that came from their place, it's then been processed by their contractors, their contractors left it in the site it's in now and left us literally in the lurch and not knowing what to do with it and nobody seeming to want to take responsibility.
"We've had to dig our hands in our pockets on behalf of ratepayers and residents, and it just needs to be gone sooner rather than later."
Sort Out The Dross action group spokesperson Cherie Chapman was also angry at Rio Tinto.
"That community has had a gutsful of that dross being a risk to their health . . . and fear about what would happen if it got into the river," she said.
Mr Parry said last week's flooding demonstrated the risk the waste presented.
"Every time we get a flood warning you brace yourself," he said.
"It's a prime risk, we know that, and it was deeply worrying as we tried to plan our response to the rising floodwaters and the scenarios running through your mind as to what might happen.
"We all want this stuff gone and one of the misconceptions that's out there is that the council somehow agreed to the stuff being put there in the first place. Not at all. It was put in there in the dead of night unlawfully by a company that's since gone into liquidation and the culprits took off to Bahrain."
Sort Out The Dross is holding a community meeting in Mataura on Friday night.
Mr Parry said someone linked to the smelter needed to front up and explain the situation to locals.