Foreign investors unhappy

Big foreign investors are turning up the heat on Australian regulators over a controversial stalled mining project in the nation's east.

Korean steel company Posco and Japanese conglomerate Mitsubishi have joined Nippon Steel and Sumitomo in warning that foreign investors are "alarmed" by a recent saga in NSW where Rio Tinto has lost its licence to expand a coalmine.

Rio's plan to expand the Warkworth coalmine was overturned in the NSW Land and Environment Court last month after campaigners from Bulga successfully argued that the expansion would have an unreasonable impact on their town.

The group of large foreign investors - who all hold stakes in the Warkworth mine - have written to NSW Premier Barry O'Farrell, describing the decision as a "dangerous precedent" for industry in the state.

"Unfortunately, the decision regarding the Warkworth extension project brings the risk and uncertainty in NSW to unacceptable levels," they wrote. "It is a major disincentive for foreign investment and will impede the state's economic development."

The companies said the issue had become a matter of "state significance" and was being "watched closely by resource companies around the world".

"It is essential that the NSW government restores certainty to the state's planning system."

The residents of Bulga - who were concerned the expanded mine would come within less than three kilometres of their town - have already seen the NSW Planning Minister Brad Hazzard declare he will side with Rio Tinto and the foreign miners in this dispute.

Rio has vowed to go to the Supreme Court in a bid to have the ruling overturned.

The dispute comes at a time when more than 30 per cent of Australia's thermal coalmines, and more than 40 per cent of the nation's coking coalmines are unprofitable, according to coalminer Xstrata.