Planning Minister Tony Kelly’s decision was applauded yesterday by environmentalists.

But Wallarah 2 spokesman Tony Smith said Mr Kelly had gone against his own planning assessment commission in rejecting the mine.

NSW Minerals Council chief executive Nikki Williams said the organisation rarely commented on individual projects but the decision ‘‘plays Russian roulette with investment and leaves the planning commission with an uncertain future’’.

‘‘While we would like to give the minister the benefit of the doubt, it is difficult to look beyond March 26 as the primary driver for this decision,’’ Ms Williams said.

The planning commission recommended the mine subject to various approvals in November last year, but its report was kept under wraps until now.

Mr Kelly made his decision on Thursday, hours before the government went into caretaker mode at midnight that night.

He said Wallarah 2 posed too many unresolved concerns over ‘‘mine subsidence, water, ecological and heritage impacts’’.

Lake Macquarie MP Greg Piper said the rejection was ‘‘a great result, but for very doubtful reason’’ – and one that reminded him of Labor’s 2007 pre-election policy banning open-cut mining in the area.

Wallarah 2’s ‘‘bitterly disappointed’’ Korean-backed owners said they were examining the decision and considering their options.

The Wallarah II rejection follows the decision against the Bickham open-cut proposal in May last year.

But the government recently approved the expansion of the Ravensworth open-cut near Singleton to produce up to 20million tonnes a year for 29years.

The Wallarah 2 proposal has been on the books since 1995, with the Korean government-backed Kores Australia taking control from BHP Billiton in 2005.

It was one of the projects used to justify the need to build a freight railway from Fassifern to Hexham.

Kores lodged its plans in late 2007 proposing to mine 5 million tonnes of thermal coal a year for 28years – making the coal worth about $1.6billion at recent prices.

Mr Smith said $80million had been spent already. The mine would cost $600million to build and would employ 300 mineworkers.

In refusing the mine, Mr Kelly said he was worried about subsidence under the Jilliby conservation area and the Wyong state forest and uncertainty over ‘‘potential surface water quality impacts’’.

The assessment commission said the mine posed no significant issues for the Central Coast water supply provided there were no major unidentified geological faults.

Shadow Central Coast minister, Chris Hartcher said the Coalition had opposed the mine since 2007 while Labor ‘‘sat on its hands’’ and passed the buck to the planning commission. ‘‘When the PAC had came out in favour, the Labor member for Wyong, David Harris abandoned faith in the process he had previously supported,’’ Mr Hartcher said.