The proposed Shenhua Watermark coal mine in northern New South Wales will be allowed to relocate 262 koalas and destroy their natural habitat, the Land and Environment Court has ruled.
The decision upholds the development approval of a mine that Nationals leader and Agriculture Minister Barnaby Joyce labelled "ridiculous" because of its proximity to prime agricultural land.
The court case was brought by local environment group Upper Mooki Landcare, who claimed the Planning Assessment Commission failed to properly assess the danger of the $1.2 billion project to the koala population.
Sue Higginson of the NSW Environment Defender's Office, who represented the case against Shenhua and the NSW Minister for Planning, said the law doesn't adequately protect or consider wildlife populations.
Nicky Chirlian from Upper Mooki Landcare said a review of environmental laws would hopefully force "big developments like this to have far more detail required as to what is actually planned for threatened species".
Despite the clearing of this legal hurdle, it was reported on Thursday that the open cut coal mine was unlikely to go ahead because it's not financially viable and a mining lease would cost $200 million on top of the $300 million already spent on the exploration licence.
This licence is due to expire on Monday and has not been renewed, halting progress on the project and an independent body is also yet to report on whether the mine's water management plan is environmentally sound.
The price of coal and Chinese demand for the commodity continues to drop.
Mr Joyce, whose electorate of New England covers the site, has criticised the mine despite Environment Minister Greg Hunt approving it.
In their submission to the process, the Environment Defender's Office said the assessment was on the impacts to the koalas was "totally inadequate. No details of the actual koala population to be impacted upon, nor what impact the project will have on the population is provided".