Most of the conditions relate to the proper use and monitoring of groundwater in the area which fuels the region’s farming industry.

Environment Minister Greg Hunt must also approve an additional water management plan, water impact verification report and rehabilitation plan before mining can start.

A total of six project reviews confirmed the mine would use less than 0.09% of available groundwater – most of which will be extracted from the lower quality deep rock aquifer which can’t be used for agriculture.

However, should the mine use more water or create larger impacts than predicted on the agricultural industry, the Minister can stop the project anytime.

The Watermark coal project is located near Breeza and will dig three open-cut pits to produce 10 million tonne of coal per annum over a 30-year period.

The project is being developed by a subsidiary of Chinese mining and energy state-owned company Shenhua Holdings, Shenhua Australia, and is expected to deliver $1.3 billion to the Australian economy each year through construction, mining equipment sales and 600 direct jobs.

Despite this and the strict conditions imposed on the project, Agricultural Minister Barnaby Joyce slammed the approval, calling it “ridiculous that you would have a major mine in the midst of Australia’s best agricultural land”.

The project also triggered controversy among environmental groups worried about the survival of koalas in the region.

The Upper Mooki Landcare Group in May launched a legal challenge against Shenhua and NSW Minister for Planning Robert Stokes after he approved the project.

The Group is claiming the NSW Planning Assessment Commission failed to properly consider whether the mine was likely to affect koalas that live in 847ha of land to be cleared for the mine.

Hearings are due August 31 and September 3.

Koalas are currently listed as vulnerable to extinction in NSW under state and federal law after numbers dropped a third over the past 20 years.