Work has started to dig up and repair a network of leaking pipes installed as part of the State Government's $311 million Ord irrigation scheme expansion.
The setback comes as the Chinese company lured to develop farmland as part of the Ord expansion closes on a deal to buy a disused sugar mill on a 19ha site near Kununurra.
It is believed the Chinese will convert what remains of the mill to crush sorghum grown as an interim crop as they assess the potential for a billion-dollar investment in sugar refining.
The irrigation pipes, some 1.8m in diameter, will be replaced or lined with fibreglass after testing found they leaked.
The pipes cover about 2.2km in total and in some places cross under a road built to access the farmland being cleared by Kimberley Agricultural Investments.
Preliminary estimates put the repair bill at somewhere between $8 million and $13 million and possibly higher depending on the extent of the problem.
Earthworks began this week close to where Premier Colin Barnett and then regional development minister Brendon Grylls opened the Ord stage two development about 18 months ago.
The State Government expects Leighton Contractors, which was responsible for installing the pipes under a deal with Landcorp, to meet the cost.
Leighton refused to comment but Landcorp said they were in talks about the work.
Landcorp regional general manager Mike Moloney said there were a number of options for tackling the leaks.
"It is not an issue of function, it is more about the durability," he said. "It is not as if we are creating lakes out of what comes out of the pipes. There won't be excavation involved with the majority of the work."
KAI is believed to be close to securing the sugar mill, which closed in 2007, in a deal with Cambridge Gulf. The price has not been disclosed but is believed to be less than half the $9.5 million KAI paid for the Kununurra Country Club Resort last year.