An Illawarra environmental group has hit out at BHP Billiton's plans to start mining a new area at its Dendrobium coalmine west of Wollongong early next year.
Planning authorities are now considering a subsidence management plan for the mine's next stage, which would involve extracting about 47 million tonnes of coal from 10 longwalls by 2022.
The plan has to be approved before mining can begin.
In the plan, the company highlights how the new mining area is "vital to the business".
Coal from Dendrobium is sold to customers including BlueScope Steel's Port Kembla steelworks.
"The consequences of not mining [the area] include loss of coal production from the Dendrobium Colliery and potential closure of all BHP Billiton Illawarra Coal operations," it says.
However, Northern Illawarra Sustainability Alliance co-convener Peter Turner argued significant environmental risks, including water loss to creeks and swamps, meant the plan should not be endorsed.
The proposed mining area, known as Area 3B, lies inside the Illawarra's water catchment and next to other sections of the Dendrobium mine.
BHP's subsidence management plan, available online, provides a detailed analysis of potential environmental risks.
It predicts maximum subsidence ranging from two metres to 2.8 metres for different longwalls, but concludes the impacts are "expected to be minor" and could be managed effectively.
"Longwalls ... have been designed with a setback from Wongawilli Creek and Lake Avon to avoid significant surface fracturing and surface-water diversion in the creek beds or beneath the lake," it says.
Donalds Castle Creek would be directly undermined with subsidence of up to two metres expected.
The plan also says impacts on swamps could include "increased ponding" and "decreased water levels" in some areas, although significant changes in water levels are not expected.
Mr Turner argued the swamps would be "very badly impacted by mining that uses longwalls of 305 metres".
"If this project has to go ahead then it needs to be significantly modified from its current proposed form, including much narrower longwalls, at least one third the current length," he said.
He said the decision should be referred to the independent Planning Assessment Commission.
Illawarra Coal president Troy McDonald said the company had been mining Dendrobium "without any significant environmental impacts" since 2001.
"Illawarra Coal's application to mine Dendrobium Area 3B incorporates a rigorous environmental assessment, including groundwater studies, resulting in management plans designed to address all potential impacts."