Queensland's Environment Department has launched an investigation into the alleged illegal dumping of thousands of litres of chemicals and waste oil by one of the state's biggest quarry operators.

Karreman Quarries is suspected of disposing of the contaminants at the company's Mount Cotton quarry in 2012.

The ABC has obtained footage allegedly showing the pumping of the waste into a pit.

Got a confidential news tip? Email ABC Investigations at investigations@abc.net.au For more sensitive information: Text message using the Signal phone app +61 436 369 072 No system is 100 per cent secure, but the Signal app uses end-to-end encryption and can protect your identity. Please read the terms and conditions.

Other videos show the young grandsons of the company's owner, Dick Karreman, operating heavy earthmoving equipment at the quarry in 2011 and 2012.

It has been illegal since 2011 for anyone under 16 to operate such equipment at a mine site — a law introduced after a high-profile case involving the Karreman family.

In one video clip obtained by the ABC, a hose leads from a tanker truck into a pit. Later shots reveal a large pool of oily black liquid in the pit.

Lawyers for Karreman Quarries have told the ABC the company "emphatically denies" the allegation of illegal dumping.

A pool of black oily liquid in a pit at Karreman's Mount Cotton quarry. ( Supplied )

The lawyers said "some oily water may have been disposed of on site" but that it had been done "lawfully and in accordance with previous recommendations from the Department of Environment and Heritage Protection".

"At all times, Karreman Quarries has operated in accordance with its environmental duty," the lawyers said.

"The subject of the video footage ... [is] being investigated and the results of those investigations will be provided to the Department of Environment and Heritage Protection shortly."

A former Karreman Quarries worker, who did not want to be identified, told the ABC he witnessed the alleged dumping.

"[They] made a big hole with an excavator and they got the tanker to dump all the waste into the hole. There was thousands of litres of oil, grease, things like that," he said.

Asked how much was dumped that day, he replied: "Roughly 15,000 to 20,000 litres of oil and chemicals."

The former worker alleged the hole was then filled in and a base for new diesel tanks built over the dumping site.

"It's now under a concrete slab. That's the only reason they dumped it there, because they were building a platform there," he said.

He claimed the illegal disposal of chemical and waste material happened regularly at the quarry.

"I witnessed what they called the acid wash being pumped into the creek that flowed through the quarry. They illegally dumped chemical drums and buried them with the front end loaders," he said.

Lawyers for Karreman denied the allegations.

Illegal dumping that causes serious environmental harm can attract fines of up to $700,000 for individuals or five years' jail in Queensland. The maximum fine for corporations is $3.5 million.

Footage shows children operating earthmoving equipment

Other footage obtained by the ABC shows Dick Karreman's young grandsons operating heavy earthmoving equipment, including an excavator and a compactor.

In one clip filmed in 2012, an adult watches as one grandson, who the ABC believes was younger than 10 years of age at the time, operates an excavator on the edge of a pond. The boy swings the excavator's arm as his older brother stands nearby.

In another incident, a large compactor is driven through the quarry and parked. A boy then jumps out of the cab, followed by a smaller boy.

Lawyers for Karreman Quarries said the incidents "were being fully investigated" by Karreman Quarries.

Other footage obtained by the ABC shows Dick Karreman's young grandsons operating heavy earthmoving equipment. ( Supplied )

"Assuming the video footage is authentic, the incidents occurred without the knowledge and authority of the managing director (Dick Karreman) and the site senior executive," the law firm said.

"Measures have been put in place to ensure that incidents of this nature [do] not occur again.

"Once our client has completed its investigations and assuming the persons in the video footage can be identified, our client will deal strenuously with those persons to ensure that the incident/s do not occur again."

In 2008, a mining inspector banned Mr Karreman's eight-year old grandson from driving a 30-tonne front-end loader at the Mount Cotton quarry.

Mr Karreman challenged the decision in the Queensland Industrial Court the following year, saying his grandson had started working at the quarry at the age of six and had racked up 500 hours of time behind the controls.

"You basically cordon him off in an area he works on by himself and the other guys keep an eye on him," he was reported saying at the time.

"It's about a father and a grandfather's rights to train up his own kid. What father or grandfather is going to endanger his own kids?"

Mr Karreman lost the appeal.

The law was changed in 2011 by the then Labor government, restricting the operation or maintenance of machinery at mines and quarries to people aged 16 and over.

Then-LNP opposition leader Jeff Seeney criticised the proposed change, telling Parliament in March 2011 it was "particularly concerning" that the amendment seemed to be motivated by the Karreman situation.

"Regulators should stay out of it and leave it to senior family members to decide what is or is not appropriate for their family members," he said.