“You can almost kiss the seat of Robertson goodbye with this one. This will backfire on the Federal Government,” said Australian Coal Alliance spokesperson Mike Campbell after Ms Price signed off on one of the final hurdles facing the mine, after more than two decades of community opposition.

Ms Price accepted Federal Department of Environment advice that the impacts on water and threatened species and communities could be monitored and managed.

Read more: Panel urged to reject Bylong coal mine because of climate change

Under the Environment Protection and Biodiversity Conservation Act assessment and approval Wallarah 2’s owner Kores, owned by the South Korean Government and Korean and Japanese mining interests, is required to prepare a trigger action response plan to identify early warning, mitigation and cease work triggers for affected watercourses, water supply and biodiversity measures.

Kores is also required to prepare a groundwater management plan and separate Central Coast water supply arrangement management plan that calculates the loss of water from Wyong River and other water sources caused by mining in the water catchment area.

The approval on Friday includes 31 conditions, in addition to 89 conditions imposed by the former NSW Planning Assessment Commission in January, 2018 after it approved the mine nearly 5 kilometres north of Wyong, despite conceding the risk of serious and irreversible damage to the Central Coast’s water supply is real.

The 89 conditions include the ability to shut down the mine if adverse impacts are beyond those anticipated and a requirement that Wallarah 2 provide 300 megalitres a year of treated water to the Central Coast catchment to compensate for any potential loss caused by mining.

Read more: NSW Greens tell NSW Parliament to protect the Central Coast's water supply from coal

Lock the Gate Alliance condemned the Federal Minister’s decision on Friday as “reckless and short-sighted”.

“This summer is showing us how precious water is and how disastrous it can be and how vulnerable we are when water runs dry,” Lock the Gate spokesperson Georgina Woods said.

“It’s reckless and unacceptable for a coal mine to undermine the water for the growing cities of the NSW Central Coast, which has suffered from water shortages in the past.  

“At a time like this, our governments should not be putting precious water resources at risk, especially not for new thermal coal mines.”

Australian Coal Alliance founder Alan Hayes said the group would consider a court challenge to the Federal decision, similar to its challenge to the NSW decision heard in the Land and Environment Court. A determination on the NSW challenge is not expected until at least April. Central Coast Council, which strongly opposes the Wallarah 2 mine, contributed $200,000 to the legal challenge.

“This is a proposed mine in a water catchment, and it’s the only water catchment the Central Coast’s got,” Mr Hayes said.

“We’ve requested the documents the Federal Minister has relied on to make this decision, and the government’s got 28 days to provide them. We will look at them and decide about a challenge but what I can say is that despite this latest approval, this has still got a long way to go.”

Read more: ‘Australian first’ in legal challenge over Wallarah 2 mine approval on Central Coast

The NSW Planning Assessment Commission approved the underground mine to produce up to five million tonnes of coal for 25 years. The coal would be exported to Korea and used in “local domestic power stations”, it said.

It noted that demand for coal for 25 years and the acceptability of greenhouse gas emissions associated with the end use of coal remained “significant uncertainties for the project”.

The commission acknowledged subsidence of up to 2.6 metres beneath a state forest area; increased flooding impacts for more than 170 property owners that could require lifting or relocating homes and increased flooding impacts affecting 15 bridges and roads.

Listen: Alan Hayes OAM questions Barry O’Farrell about coal mining

It also acknowledged that “economic costs and benefits of the project are finely balanced, with inevitable uncertainties about demand for thermal coal 20 years in to the future”, after Kores’ economic benefit estimate of $1.56 billion to the state was reduced to $32 million in a report commissioned by the Department of Planning.

Liberal MP for Robertson Lucy Wicks holds the seat with a margin of 3.1 per cent. Robertson has been targeted by Labor as a winnable seat at the Federal election.