The jobs of 1300 workers are at risk after a NSW court overturned approval for a Rio Tinto coalmine expansion.
As environmentalists welcomed the NSW Land and Environment Court judgment handed down on Monday, Rio warned it would now review the viability of the Hunter Valley mine in question.
Coal and Allied acting managing director Darren Yeates attacked the NSW planning system after the decision, which overturns the state government's approval for expansion at the Mount Thorley Warkworth mine, at Bulga.
Coal and Allied is the Rio-owned company that runs the open-cut mine and two others in the region.
The decision was a blow to the 1300 people who work there at a time when the Australian coal industry was struggling to remain globally competitive, Mr Yeates said.
"It is also a setback for hundreds of suppliers across the Hunter Valley and NSW who do business with the Mount Thorley Warkworth mine and will directly impact the region's economy." The overturning of the decision followed a rigorous 3-year government process, and the granting of approval by both state and Commonwealth environment departments, he said.
The decision, which highlights the mine's impact on the environment and local community, followed a legal challenge from the Bulga-Milbrodale Progress Association.
In his judgment, Justice Brian Preston, chief judge of the Land and Environment Court, said the association's appeal should be upheld due to "the significant, diverse biological adversity, noise and dust and social impacts of the project".
He said the impacts "would exacerbate the sense of loss of place, and materially and adversely change the sense of community of the residents of Bulga and the surrounding countryside".
Anti-mining group Lock the Gate welcomed the decision, saying it showed the flaws in the approval process for coalmines in NSW.
"This is a huge win for the community of Bulga," Lock the Gate Hunter regional co-ordinator Steve Phillips said. "This mine would have had major impacts on air quality and people's health."
NSW Greens MP Cate Faehrmann said the ruling put other projects in the spotlight: "The days when king coal could brush aside communities and the environment are drawing to a close."