Illawarra miner South32 has launched a fightback after its proposed Dendrobium mine expansion was knocked back.
In February, the Independent Planning Commission rejected the miner's plans to extend the life of Dendrobium to 2048 and extract an additional 78 million tonnes of coal from two new areas near Avon and Cordeaux dams.
The IPC felt the risks to the water catchment from the expansion of the Kembla Heights mine were too great.
"After careful examination of all the evidence and weighing all relevant considerations, the commission has found that the longwall mine design put forward by South32 does not achieve a balance between maximising the recovery of a coal resource of state significance and managing, minimising or mitigating the impacts on the water resources and biodiversity and other environmental values of the Metropolitan Special Area," the commission's Statement of Reasons for Decision read.
On Tuesday, South32 started proceedings in the Land and Environment Court seeking a "judicial review" of the IPC's decision.
"This is one of a number of options we are pursuing in relation to the project, and we continue to work with all relevant stakeholders and look at potential alternative mine plans," a South32 spokesman said.
"The Dendrobium mine extension proposal received widespread support from community, government and industry during the approval process."
The spokesman claimed the extension "would provide major economic and social benefits for the Illawarra region and for NSW".
"Metallurgical coal has been mined in the region for 150 years, supported by the NSW government's own policy on mining in the catchment," the spokesman said.
The rejection by the IPC prompted NSW Deputy Premier John Barilaro to consider whether the government was able to overturn the decision.