The Independent Planning Commission knocked back the plan to mine three million tonnes of coal a year from the Wongawilli seam.

Over the proposed 23-year life of the mine, approximately 50 million tonnes of coal would be extracted from land underneath the Belanglo state forest.

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As well as the mine, a rail loop had been planned closer to Berrima, to transport the coal to Port Kembla.

"The commission finds that the potential impacts associated with the project are too great to be reasonably managed," the ruling stated, "and the social risks to the community are high.

"The likely benefits of the project do not outweigh the adverse impacts and this warrants the conclusion that the project is not in the public interest."

The commission found it would result in "unacceptable groundwater impacts", due in part to the prevalence of private water bores in the area.

"An approval would result in significant social distress for the community as many private bore users would be required to enter a prolonged and disruptive negotiation process with the applicant with respect to access and make-good arrangements," the commission's report stated.

There was also a risk to Sydney's drinking water catchment.

The commission identified a number of "adverse social impacts", relating to residents' way of life, the community, personal and property rights, and "the community's fears and aspirations"

It was also judged the planned mine was incompatible with surrounding land uses, including tourism and small-scale agriculture.

The proposed mine had sparked a lot of local opposition over the years, and many of the protest groups were pleased with the planning commission's decision.

Peter Martin from the Southern Highlands Coal Action Group said it had been 11 years since their first public meeting to oppose the development from Hume Coal (owned by South Korean steelmaker Posco.

"A mine in this beautiful and historic area never made any sense and would have been catastrophic for the groundwater on which many landowners and businesses rely," Mr Martin said.

He said it had been a "knock down and drag out" struggle for the community against the Korean steel maker which had fought to push the project through.

The Battle for Berrima president Hugh Farrimond said the ruling was an "absolute victory" for locals.

"Throughout the past six years that Battle for Berrima has been fighting the proposal, we have continually highlighted concerns about the mine design, risks of subsidence, groundwater drawdown, risks to surface water - including to Sydney's drinking water catchment area, impacts to local biodiversity, amenity impacts, adverse impacts to existing industries, including tourism and agriculture and social impacts including ongoing stress and disharmony associated with the project," Mr Farrimond said.

"We express our heartfelt thanks to the hundreds of volunteers who joined this epic fight to help with fundraising, petition stands, trips to NSW Parliament, protests, information gathering, and research.

"Without their commitment and determination, we could not have achieved this outcome."

Some felt the Independent Planning Commission's decision didn't go far enough.

"The IPC's decision is correct and welcome, but it is disappointing that the climate impacts were not mentioned given the International Panel on Climate Change issued its most sobering report to date just weeks ago," Nature Conservation Council Chief Executive Chris Gambian.

Hume Coal was contacted for comment on this story.

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