Environmentalists say a court ruling against an Xstrata mine could set new standards for the way the coal industry deals with carbon emissions.
The Newcastle Herald reported on Monday that a Land and Environment Court provisional judgment ruled Xstrata should have to pay to offset greenhouse gas emissions as a condition of a 2010 approval for expansion.
Hunter Environmental Lobby spokeswoman Jan Davis said the group challenged the approval of Xstrata's Ulan mine extension because of the increased greenhouse emissions it would generate and the effects on the Goulburn and Hunter rivers, groundwater and native vegetation.
The group estimated that Ulan, near Mudgee, would emit 28.7 million tonnes of carbon dioxide equivalents a year or, over the life of the mine, 575 million tonnes.
The judgment found it would take more than 200 years at least for groundwater levels to recover from the mining expansion.
The judgment set conditions for Ulan to mitigate and offset the additional scope one emissions - those that come directly from mining.
"This is the first time a court in Australia has imposed such conditions," Ms Davis said.
She wants environmental assessments of proposals to be done before exploration licences are granted.
Former planning minister Tony Kelly approved the expansion, to double production and the mine's life, to 2031.
Australian Coal Association chief Dr Nikki Williams said she believed the carbon tax made the case redundant.
Xstrata is likely to appeal against the judgment.