The Anvil Hill Project Watch Association argued in court that Environment Minister Malcolm Turnbull's department should have considered the ramifications more thoroughly before approving the project.

But judge Margaret Stone dismissed the application to have the case reviewed.

The State Government approved the multi-million-dollar project in June, which will produce up to 10.5 million tonnes of coal per annum for 21 years.

Anvil Hill was subject to a rigorous environmental assessment process but is still widely opposed by environmental groups who claim it ignores the dangers of climate change and water shortages.

Centennial Coal sold the Anvil Hill project to Xstrata Coal this week for $A425 million, and is now waiting for final approvals on the sale.

The opencut mine is on target to start producing coal in 2009.