The shockwaves from the Independent Planning Commission's rejection of the Dendrobium mine expansion are continuing, with the NSW Nationals raising the prospect of special legislation and the Minerals Council calling the decision a "dagger at the heart of the Illawarra economy".
In a decision which surprised some, the IPC ruled the water catchment was more important than coal mining above the escarpment, blocking South32's bid to expand further inland.
South32, which employs up to 400 people at Dendrobium, wanted to extend the mine's life to 2048 and extract an additional 78 million tonnes of coal from two new areas near Avon and Cordeaux dams.
But the IPC decided that it was not in the public interest because it did not "achieve an appropriate balance" between environmental, social and economic factors, given the importance of the water catchment and the likelihood of surface-to-seam cracking under creeks.
"The impacts associated with the project are not appropriately manageable, and the risks of adverse impacts on the environment are high and likely to be irreversible," its decision said.
The IPC also cast doubt on South32's claim the BlueScope steelworks would have to close if this expansion was not approved, saying the planned order of extraction suggested otherwise.
"The dependence of BlueScope steelworks on Wongawilli Seam coal from the Dendrobium mine is unclear given that the Wongawilli Seam would not be available for some after the proposed cessation of longwall mining at Dendronium mine in 2024 even if the project was approved," it said.
This was because the Bulli Seam would be mined first, and Wongawilli not for 19 years afterwards. Coal from the seams has different characteristics which affects the blend for steelmaking.
South32 chief operating officer Jason Economidis said the company was "disappointed" by the decision and was reviewing its options.
"We have a long history of operating safely and responsibly in the Illawarra region, creating jobs, investment and opportunities within the community," he said.
"We believe it's in the public interest for the project to proceed, preserving local jobs in the region.
"The NSW government had already deemed this project approvable, taking the view that the project had been designed in a manner that achieved a good balance between maximising the recovery of coal and minimising the impacts on water resources, biodiversity and other environmental values of the Metropolitan Special Area.
"This process creates uncertainty for companies considering large investments in New South Wales."
Mining Minister John Barilaro said he would pursue legislation to override the IPC decision.
"I don't know what that avenue looks like - is there an opportunity for maybe a Bill in the House?" Mr Barilaro said.
"Is there an opportunity for the Government to deliver a verdict beyond the IPC decision?"
The Department of Planning, Industry and Environment had recommended approval, saying the benefits outweighed the risks to the catchment. WaterNSW, the agency manages the state's water supply, had opposed it.
Environmentalists, meanwhile, were jubilant.
Deidre Stuart from the Illawarra's Protect Our Water Alliance was relieved.
"The decision is the right decision - a decision that listens to the science and evidence, and considers the long-term future for the environment, economy and community in our area," she said.
"We will always need water. And other living species and ecosystems also will always need water. But we will not always need coal."
Nic Clyde from anti-coal group Lock the Gate said the NSW Government should now move to ban mining in the water catchment.
The Mercury asked Planning Minister Rob Stokes for comment but did not get a response.
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