The Australian government is seeking at least $120m from the owners of a Chinese coal carrier that destroyed part of the Great Barrier Reef.

Shenzhen Energy Transport is arguing against paying for the clean-up of the Douglas Shoal, which was severely damaged when the Shen Neng 1 went off-course and grounded in April 2010.

The federal court heard on Tuesday the crash site was contaminated with hundreds of kilograms of paint particles tainted with the highly toxic anti-fouling agent tributyltin, also known as TBT.

TBT slows the growth of aquatic organisms on ship hulls and marine biologists say the particles need to be removed from the 40-hectare crash site to allow the area to recover.

But the carrier’s owner said the reef was self-healing and the company should not have to pay for a clean-up that was not needed.

It also disputed the testing methods that led to the detection of TBT in the area.

Shenzhen Energy Transport’s maritime insurer, London P&I Club, said in a statement the Australian government’s estimated costs of fixing the reef were “unsubstantial and unrealistic”.

In 2012, captain Jichang Wang and chief officer-on-watch Xuegang Wang were convicted over their role in the negligent navigation that led to the grounding.

Both men were employed by an independent ship management company.

The hearing continues.