By James Grubel CANBERRA, May 15 (Reuters) - Australia's worst drought in a generation has forced one country town to take the agonising decision to sell its emergency water supplies in order to protect jobs at a local gold mine. The decision by the city council at Orange, about 200 km (125 miles) west of Sydney, came as authorities warned that tougher household water restrictions were likely unless Australia's east receives strong winter rains over the coming two months. Newcrest Mining Ltd. <NCM.AX>, Australia's largest locally listed gold miner, had warned the Orange city council it might have to close its nearby Cadia Hill gold mine, which employs about 400 people, unless it could guarantee further water supplies. After a heated debate, the council on Monday voted eight votes to four to supply five megalitres (1.3 million gallons) of water a day to the Cadia mine for the next three months, in a decision local mayor John Davis said would protect the city's economic lifeline. "This would continue it to four months supply, which will get us through the autumn-winter section, which is the most likely period for rain, and which would prevent them from closing down," Davis told Australian radio on Tuesday. "The view that we've taken is a big picture view," he said, saying the decision would protect jobs at the mine and those of another 2,500 people in associated industries who live and work in his community of about 40,000. He said the water would come from two backup dams which are not used to supply drinking water, but which supply an emergency backup if water levels in the town's main dams continue to fall. Australians are already enduring tough restrictions on water use, with most cities making it illegal to use hoses to wash cars or sprinklers to water gardens, due to low storage levels after six years of drought. In New South Wales, the country's most populous state, about 85 percent of farmland remains in drought, although recent rains have increased dam storage levels around the state capital, Sydney. In a statement, Newcrest said the decision would allow the Cadia Hill mine to continue operations into the winter months. "The allocation, in combination with the mine's existing water reserves, will enable current production levels to be maintained well into the winter months, when seasonal rainfalls would normally be expected to occur," the company said.
