The new works will treat sewage which currently goes into the sea
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The go-ahead has been given for Welsh Water to build a controversial sewage plant on an industrial estate outside Holyhead.
Ynys Môn planning committee granted the application on Wednesday afternoon.
Local people have objected to the site on the Penrhos Industrial Estate, holding a number of protests there.
They are against the development on the grounds of the smell and fears that it might deter businesses from setting up on the estate.
The plant is needed to cater for demand from new housing and businesses and has to be operational by 2005 if Welsh Water is to avoid falling foul of new European regulations on sewerage.
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I am concerned that we will not be able to attract more businesses to a site that is so close to treatment works
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At present, sewage from the Holyhead area is discharged into the sea and receives either basic treatment or none at all.
But the company must make sure that these discharges meet the requirements of the Urban Wastewater Treatment Regulations in two years' time.
Ynys Môn planning committee had rejected an earlier application and Welsh Water had lodged an appeal to the Welsh assembly.
But now the company has got the go-ahead it needs after it put forward a new application.
"This is a very sad day for democracy," said local Anglesey Councillor Keith Thomas.
"When councillors can be put under so much pressure from large companies like Dwr Cymru, the assembly and our own council officers.
Treatment works
"Four shops are being developed on the Penrhos site within a few hundred yards of the proposed works.
"I am concerned that we will not be able to attract more businesses to a site that is so close to treatment works and, of course, there is the odour."
The council received 15 letters of objection expressing concern about the effects of the smell on the Kingsland, London Road and Morawelon areas, and on a local school, supermarkets and hospital.
However, planning officials concluded that their fears of a problem with smell would not arise from a well designed and maintained, modern plan.
Holyhead Town Council also objected, but Trearddur and Llanfair yn Neubwll Community Councils both approved of application.
Building of the works is expected to take about 18 months. It will have the capacity to cater for a population of 25,760.
Cllr Thomas vowed the opposing group he represents would not give up the fight against the development.
"Our message to Dwr Cymru is we may have lost the fight but we haven't lost the war."