Residents of the small Hunter Valley community of Bulga have lost their battle against a controversial mine expansion, with the project given final approval.

The Mount Thorley Warkworth project has been the subject of a long-running war between mining giant Rio Tinto and the residents of Bulga.

The Planning Assessment Commission (PAC) today approved the mine's expansion which will see the life of the mine extended by more than 20 years.

The proposal will involve the creation of an open cut super pit near the village of Bulga, to extract hundreds of millions of tonnes of coal.

The expansion plan had threatened to force the township to relocate, but a PAC report later said the relocation would not be necessary.

It has been fought fiercely by Bulga residents, who say it will destroy their community.

Bulga resident John Krey has been fighting the expansion for six years and was devastated at the news.

"This will destroy the village of Bulga," he said.

"There are three other towns around here that have gone under, disappeared because of the impact of open cut mining.

Rio Tinto's said the expansion of the Mount Thorley Warkworth mine is good news for workers. ( Supplied: Rio Tinto )

Mr Krey said 400 people lived in Bulga.

"We will be pushed out of our homes because of a large international mining company wanting to extract coal," he said.

"It's not on - this is wrong, it's wrong whichever way you look at it.

"It's a very black day for the NSW Government, and both Baird and Stokes should hang their heads in shame.

"The concerns have been heard, but they haven't been taken on board."

"Our concerns, backed up expert opinions, have been either rejected or ignored.

"We want to know why.

"Why is it that the PAC and the Government only listen to the mining company's experts, and not our independent experts?"

In approving the project, the PAC said it was satisfied the mine's benefits outweighed its potential impacts.

The commission has recommended conditions to address air quality and noise concerns.

Mount Thorley Warkworth general manager Mark Rodgers said it was great news for more than 1,000 mine workers.

"Our workforce, especially before Christmas, have got some positive news," he said.

"They can get on with managing their lives, and focusing on the job and on their safety, and it's a really great outcome."

Mr Rodgers said it was a pleasing result after a drawn out process.

"I'm very happy with the support we've received from the workforce and the community," he said.

"I just really want to thank all of those people for their continued support in getting us to this end point."

Singleton Chamber of Commerce president Chris Cork said the announcement was welcome news for the region's small businesses and suppliers that are reliant on the mine.

"As the region continues to struggle with unemployment rates, this will obviously bring relief to Mount Thorley Warkworth's 1,300 employees and their loved ones, as well as the many mining related services that rely heavily on MTW's operations," he said.

Drayton South mine rejected by PAC

Workers at another Hunter mine have been sent home, amid news their operation is facing closure after expansion plans were recommended for rejection.

Anglo American was pinning its hopes on the Drayton South mine expansion to protect 500 jobs.

But today the PAC recommended the project be rejected, and project director Rick Fairhurst said it was a bleak day.

"It's not the final determination," he said.

"However, I think evidence from the past shows that generally, when a recommendation is made, that the determination follows accordingly.

"Clearly this is indicating that we will be moving into closure at some time in 2016 at Drayton."

Mr Fairhurst said devastated workers had been sent home after the mine was shutdown for the weekend.

Buffer zones recommended to protect communities

Planning Minister Rob Stokes has indicated the Government would now consider the recommendations for both mines.

Mr Stokes said, in addition to the PAC recommendation that the Drayton South project not go ahead, it also recommended buffer zones be imposed between contentious mining proposals and affected communities.

He said the Government would shortly consult on a proposal to prohibit open cut mining within a 2.5km buffer between the Mount Thorley Warkworth mine and the village of Bulga.

Fact sheets and reports on the decisions are available on the PAC website.

The NSW Hunter Valley town of Bulga seen from the air, next to Rio Tinto's coal mine.

Minerals Council says it's a 'bittersweet day'

The New South Wales Minerals Council has reflected on both mine decisions, describing it as a bittersweet day for mining communities in the Hunter.

"Final approval for the expansion of Coal & Allied's Mount Thorley Warkworth mine is welcome news for the mine's 1,300 mining workers and their families," the council said.

"This decision will secure these direct mining jobs, as well as thousands of other jobs in related industries and businesses across the region."

"However, the recommendation today by the PAC that Anglo American's Drayton South Mine not be approved is a devastating blow for hundreds of workers at the project and their families leading into Christmas."

The Minerals Council said both projects should have been approved.