Opal fever: adventures in the Outback

I am terrified of heights and mildly claustrophobic, so why am I clinging to a swaying ladder half-way down an 80ft mine shaft with my mouth full of dust and my heart beating like a jackhammer?

There is a simple answer. I am suffering from a malady that afflicts many in Coober Pedy, a township crouching on the world's richest opal fields, in the South Australian desert. I have only been here 36 hours, but already I feel a little crazy. Opal is all around me, locked away under layers of rock beneath my feet. I can sense it, I can almost smell it. Now I want to see it in the raw.

Fifteen minutes later, I am crawling through a labyrinth of passages that culminate in a low chamber recently dynamited by Dave Marsh, a miner. Dave is flat on his back in the rubble, hacking away at a sandstone wall. He stops abruptly and hands me a chunk of rock in which his lamp picks out shimmering reds and greens. "Look at those bits of colour," he says. "That's opal."

We find only tiny pockets of the precious gemstone, but Dave will be back. Like the early miners, who placed their possessions in wheelbarrows and walked 150 miles across the Stony Desert to Coober Pedy, he is hooked. "Once you've had a decent find, it gets under your skin and you can't let go," he says. "I found $30,000 [£11,300] worth on my second day underground in 1976. You just need to be lucky. You just need to drill a hole in the right place."

As jobs go, it's a gamble, but this is a town of gamblers, half-drunk on the notion of striking it rich. Permits are cheap, and prospectors require only a good instinct and basic equipment. "Everyone here is living on a dream," says Peter Rowe, a former miner. "Where else can you go to work broke and dig out a fortune in 20 minutes?"

For the sake of the dream, locals are prepared to endure harsh Outback conditions that include dust storms, plagues of flies and midsummer temperatures of over 50C. To escape the searing heat, they have retreated underground, carving homes – "dug-outs" – in a ridge of hills overlooking the town. Subterranean living has become the norm in Coober Pedy; there are shops, hotels, churches and restaurants underground.

The dug-outs offer some relief, but the brutal environment – combined with the lure of an easy dollar – makes for a rough and rugged frontier town with more than a hint of the Wild West. Trucks displaying "Explosives" signs clatter around the streets, and a notice outside the drive-in cinema, soon to reopen, politely requests that patrons refrain from bringing in dynamite. Poker games turn into three-day sprees, and mining disputes are settled with fisticuffs in the pubs.

In the Nineties, the police station and courthouse were bombed and a German tourist was murdered, her body hidden down one of the thousands of unmarked mine shafts that perforate the desert landscape. Two other disappearances of young women in the town, 530 miles north of Adelaide and 440 miles south of Alice Springs, remain unsolved.

Coober Pedy attracts more than its fair share of misfits and desperadoes, but it also has a warmth and raw charm that explain why people stay on long after their hopes of becoming millionaires have evaporated. Many residents claim that they stopped off only to buy petrol and never left. Some fell in love with the remarkable scenery: the colourful rocky outcrops of the Breakaways, used as the location for numerous films including The Red Planet and Max Max Beyond Thunderdome, and a singular moonscape bisected by the Dog Fence, which keeps dingoes out of sheep-farming country.

Tourism is flourishing, and disillusioned miners have opened opal shops, cafés and underground motels. But the opal industry continues to thrive, and to give the place its unique flavour. Approaching the town, you pass curious-looking vehicles such as blowers, a Coober Pedy invention: giant vacuum cleaners that suck out earth from below ground. The terrain is dotted with grey heaps of spent soil. There is an edge, something urgent, in the air.

The first opals were discovered by a 14-year-old boy, Willie Hutchinson, who was prospecting for gold with his father in 1915. Soldiers returning from the trenches of the First World War flocked to the area and excavated the first underground dwellings. A settlement took shape, which Aborigines called Kupa Piti, meaning "White Man's Burrow".

Most miners arrived in the Sixties and Seventies, converging on Coober Pedy from around the globe. The current population of 3,500 comprises more than 40 nationalities, including Greeks, Poles, Germans, Italians, Serbs and Croats. They live together in relative harmony in a town that produces 80 per cent of the world's opal, most of it bought on the fields by dealers from Hong Kong. Large companies play no part, with mining permits sold only to individuals or small groups.

Life is considerably easier now than in 1967, when Peter Rowe arrived from Melbourne. "I lived in a tent on the opal fields, washed in a bucket, lived off kangaroos and rabbits," says Peter, an affable 57-year-old. "There were 1,000 men in the town and 30 or 40 women. It was a wild place. Those were exciting days. It was like the Gold Rush.

"You'd find nothing for six months, and then suddenly it was everywhere. You'd pay all your bills and go on holiday, but you put most of it back into the ground – bought more machinery in the hope of finding more opal. Like putting your winnings back into a slot machine."

Like most locals, Peter, who lives in a neighbourhood called Hopeful Hills, tells a story of narrowly missing out on a fortune. In 1972 he relinquished a mine to another family, who drilled 4ft deeper and found an opal seam worth $600,000 (£226,000). "They never even bought me a beer," he says. "They were so embarrassed when they saw me that they crossed the street."

Broke and fed up, he gave up mining, and now runs a successful family pottery and tour business. Coober Pedy has changed, too; the main road, formerly a creek bed with tree stumps growing out of it, was sealed in the late Eighties, and the town acquired running water and street lighting around the same time.

The infrastructure came so late because the authorities regarded Coober Pedy as temporary, and the town still has that feel about it. It looks like a ramshackle afterthought of a place, a collection of concrete and corrugated iron plonked down in the middle of the desert. There is not a speck of green in sight; instead of front lawns, homes have junkyards where rusting car bodies and mining equipment lie abandoned.

If Coober Pedy has a greater degree of civilisation than in the past, it is a thin veneer. The pavements are still earth strips where stray dogs lounge in the shade, batting away flies. The golf course has no grass. Mining inspectors are no longer chased off the opal fields at gunpoint, but there are plenty of crooked and desperate characters around, none more reviled than the "night-shifters", who listen out for news of a big find and sneak off to strip the mine bare in the dark.

Dave Marsh was cleaned out by night-shifters recently and is fuming. "They're playing a dangerous game – they're taking their lives in their hands," he says. "If someone's in my mine, I might drop a bit of lit fuse and a detonator down to scare them, but there's some that might drop a bomb down." A more common form of revenge is to blow up the offenders' vehicles. Police do not enquire too closely into such incidents.

Syd Smart, a retired chief mines inspector, loves to reminisce about the era of Machinegun Joe, who would wander around town randomly discharging his weapon, and Karl Bratz, whose gravestone consists of a beer keg inscribed with the words: "Have a drink on me".

Syd was a coal miner in south Yorkshire before he came to Coober Pedy in 1970. "There was so much opal then that people would throw a hat in the air and sink a shaft where it landed," he says, offering another bottle of Westend Draft beer from a seemingly inexhaustible supply in his fridge. "No one else from the Mines Department would come here because of the town's reputation. When I took the job, they said, 'Don't call us, we'll call you.'"

In Syd's home, a comfortable dug-out near the Serbian Orthodox church, the advantages of underground living become plain. Outside, it is pushing 40C – relatively balmy for January in Coober Pedy, but hot nonetheless. Inside, it is blessedly cool, while the low ceiling and honey-coloured stone walls convey the sensation of being inside the womb.

You could, perhaps, get used to the heat, but not to the dust, which coats your skin from the moment that you step outside. It makes your hair a matted, tangled mess.

The environment is not the only hazard. Peter Rowe pulled more dead and broken bodies out of mine shafts than he cares to remember during his time as head of the Mine Rescue Squad. The earth tracks that criss-cross the opal fields are studded with warning signs. Tourists have died after failing to heed advice to avoid walking backwards while taking photographs.

Despite the dangers, opal mining retains its lure. Everyone mines at least part-time, including teachers and policemen. Lloyd Hetzel is a driver and maintenance worker, but his preoccupation is mining. "I've been here 15 years and I've never had a good find," he confesses. "It's quite embarrassing, considering all the hard work I've put in."

Originally from the coast, Lloyd extols the joys of life in Coober Pedy – although his wife left him soon after they arrived, a common occurrence in a town teeming with single men.

In the saloon bar of the Opal Inn Hotel, Jimmy Nikoloudis recounts a 38-year love affair with opal. "I found a bit in 1964, enough to buy a house, but being young, I went to Adelaide and went dancing with beautiful women instead. I came back and found some more, and that's how it's been: up, down, like a heartbeat graph."

On the next stool is Keith "Moose" Gregson, a kangaroo hunter, fresh into town and looking for a mining partner. "Roo-shooting is the hardest work I've ever done," he says. "You need to shoot minimum 40 a night to make ends meet, and cleanliness is crucial. The roos can be in the back of the truck for 12 hours before they hit the fridge."

Like all newcomers, Keith is entranced by the concept of living on top of so much wealth. The idea still seduces long-time residents too. "You might as well keep trying your luck," says Dave Marsh. "You never know what you're going to find tomorrow."

Getting there

Trailfinders (020-7938 3939; www.trailfinders.com) is offering return flights with Garuda to Adelaide via Bali for £574 until 31 March. It is also offering returns with Qantas to Adelaide via Singapore for £641 from 1 April to 30 June. Kendell Airlines (00 613 9623 3333; www.kendell.com.au) flies between Adelaide and Coober Pedy four times a week from A$440 (£166) return (flight time one hour). Alternatively, hire a car (530 miles) through Budget (00 618 8672 5333), which offers a week's hire from A$325.36.

Being there

Kathy Marks stayed at the Desert Cave Hotel (00 618 8672 5688; www.desertcave.com.au). Underground rooms $175 (£66) per night. Coober Pedy Tourism Information Centre (00 618 8672 5333) has accommodation lists.

Further information

The 2002 Opal Festival (www.opalcapitaloftheworld.com.au) is from 28-31 March. Visit Old Timers Mine and Umoona Museum. Desert Diversity Tours (www.desertdiversity.com) are recommended. South Australian Tourism Commission (www.southaustralia.com).