Anglo American, the project's former owner, also closed the nearby Drayton coal mine. Credit:Phil Blatch Groups opposed to the project, though, say the proposal merely formalised a decision already made twice by the PAC that open-cut mining was not suitable for the site. The Hunter Thoroughbred Breeders Association, which have argued against the mine, said the move was a "token gesture" that would perpetuate uncertainty in a battle that had already been waged for six years. "The message the NSW government has sent today to our industry, employees and investors is that Australia's premier thoroughbred breeding Industry is not valued, not protected and not wanted in the Hunter Valley," Cameron Collins, the association's president, said. "How many more PACs and mining applications will it take for the NSW government to understand that mining and thoroughbred breeding are incompatible land uses in close proximity."

Malabar Coal, which expects to finalise the purchase of the project from mining giant Anglo American in coming months, said it had also voluntarily surrendered part of the previous exploration licence that had extended south of the Golden Highway and encroached on the leading horse studs. A spokeswoman for the miner said Malabar did not receive any compensation for relinquishing part of the licence. "In fact, it was Malabar who asked the NSW government to make this change to ensure its commitments to the community were binding," she said. 'Disappointed' Georgina Woods, NSW coordinator for Lock the Gate, said her group was disappointed by "this narrow and weak gesture". "Jerry's Plains is rich and fertile farmland that needs broad and effective protection from all forms of mining, not just open-cuts," Ms Woods said. "If balance is to be restored, the government needs to make all critical industry cluster lands for the horse and wine industries of the Hunter Valley off limits to mining of any kind."

The NSW Minerals Council, though, said the renewal of the exploration licence for the Upper Hunter project was "a commonsense decision that will ensure the potential for a new underground mine is properly assessed based on facts and evidence". "A proposed underground mine at the site will be completely different from past open-cut proposals," the council said in a statement. "If approved, the mine at EL 5460 would be completely underground, invisible to the local horse studs, would involve no mining underneath any other properties, and feature a mine entrance at least five kilometres away from the closest studs." Malabar Coal said the mine would be renamed "Project Maxwell" and if approved would create about 350 new direct jobs into the local community. It would also generate $1.7 billion in royalties over the initial 30-year period, with $600 million per year in export income for NSW. The mine would also pay $55 million per year in wages and $100 million per year in taxes, the company said. The spokeswoman for Malabar also said that once its purchase of the Drayton and Drayton South assets from Anglo American was completed, Malabar would continue rehabilitation of that site.

"Malabar will achieve a better outcome for the site than was previously proposed by using reject stone to fill the existing voids," she said. Jeremy Buckingham, NSW Greens energy spokesman, said his party welcomed the acknowledgement that open-cut coal mining was incompatible with horse breeding but said the recognition should be extended to all the other farmers and communities impacted by coal. "Most Australians want our good agricultural land and water resources, such as the Liverpool Plains, Bylong Valley and Southern Highlands, protected from coal mining, not just special treatment for well-connected and wealthy horse studs," Mr Buckingham said. Loading "Not only is coal mining bad for air quality and impacts on water resources, but it is cooking the climate," he said, adding the Greens want the mining of thermal coal used in power stations to be phased out within a decade.

The proposal is on exhibition for public submissions until December 14.