The upper portion of the King River valley was first surveyed for damming in 1917 by the Mount Lyell Mining and Railway Company.

Water drawn from the lake is used to supply the conventional hydroelectric John Butters Power Station, operated by Hydro Tasmania.

[3] About 1.5 million tonnes of sulfidic tailings entered the river system each year up to 1995, along with huge volumes of acidic, metal-rich water flowing from the workings.

When it was in operation, the fumes from the ore smelter produced acid rain which also leached minerals from the bare Queenstown hills.

However, acid water continues to enter the river due to mine dewatering and run-off from the waste rock dumps.

Without the buffering previously provided by the alkaline tailings, the acidity in the Queen and King rivers has increased, and dissolved metal concentrations have greatly increased-to levels highly toxic to aquatic life.