Rotorua Lakes Council has confirmed its commitment to the Mudtopia festival, an event considered to have the potential to become a major iconic event for New Zealand.

Expected to bring both national and local economic benefits, the event was inspired by the world-renowned Boryeong mud festival in South Korea and will build on Rotorua's reputation as a geothermal, spa and wellbeing tourism destination, featuring mud-related activities and top music acts.

It's conservatively estimated the mud festival could attract 9500 to 21,600 attendees over the first five years of its growth and provide a $5m economic impact in its first year, growing to $10m by year five.

Negative publicity about the planned purchase and use at the festival of highly treated cosmetic mud powder from South Korea for a Boryeong component at the Rotorua event is expected to impact on its bottom line this year.

It's expected to reduce the event's ability to attract further sponsorship and grants and to potentially impact on ticket sales.

Following an update to Rotorua Lakes Council's Operations and Monitoring Committee yesterday, the council reconfirmed its support for the Mudtopia festival, noting the increased risk but also noting that the value proposition of the event holds.

Most of the mud being used for the festival will be locally-sourced geothermal mud – which will be purchased in a treated powder form.

As part of a reciprocal arrangement with Boryeong, five tonnes of high quality, highly treated cosmetic mud powder will be imported from South Korea for a hands-on component that will promote the Boryeong festival.

Council staff and the event's managers continue to work with the Ministry for Primary Industries to ensure all border requirements are met and there are no biosecurity risks.

In exchange for the $90,000 purchase, Boryeong is sharing its intellectual property, advice and support, and promoting the Rotorua festival.

The council's Acting Group Manager Operations, Henry Weston, says while the impact of the negative publicity and incomplete reporting on the event could not be quantified exactly, it could see the festival cost Council between $234,381 and $575,871 according to best estimates.

The original business case estimated a surplus of about $38,000 in the first year with any surplus to go back into making the festival a success in future years.

Planning for the event was well advanced and withdrawing would cost the council up to $900,000 which is the total amount already committed and includes $460,000 already spent, Mr Weston said.

Rotorua Lakes Council committed to owning and underwriting the event, subject to government investment, in December 2015.

This followed extensive independent feasibility work, consultation and presentation of a comprehensive business plan.

The agreement with Boryeong was undertaken as part of the operational delivery of the festival.

About the cosmetic mud powder

• The event organisers have been working with the Ministry for Primary Industries (MPI) regarding the importation of the mud powder for over a year to ensure all border requirements are met.
• The mud is sourced from a coastal area in South Korea and is turned into a powder.
• The powder will be treated to what is called 'sterility” level. After being heat treated it will then go through gamma irradiation and a certificate of treatment will be required by MPI.
• A small test sample was imported under the supervision of MPI earlier this year and no risks were found.
• The 5 tonnes of powder won't be used all at once – it may last several Mudtopia festivals.
• The cosmetic mud will not be used in any mud pit type activity but in a hands-on experience where people will be able to apply it to their skin.
• All mud from the festival will be contained, removed and disposed of by a waste management contractor.
• The cost of purchasing and importing the cosmetic mud powder from South Korea will come from the overall event budget, which includes funding from Rotorua Lakes Council, the government's Major Events Development Fund, sponsorship and ticket sales.
• The mud powder purchase is part of a reciprocal arrangement with