On Thursday the New South Wales Environmental Protection Agency revealed that an incident at the mine resulted in water and coal fines entering the nearby Wollangambe River with at least 150m of the river showing signs of impact.

“The EPA is obviously very concerned about any impacts on the Wollangambe River, which runs into the Greater Blue Mountains World Heritage Area approximately 2km downstream of the mine,” EPA south director Gary Whytcross said.

“This is a very sensitive environment. A full assessment of environmental impacts is continuing and the EPA is collecting evidence on to determine potential breaches of the environmental legislation.”

Centennial initially said the incident involved the overflow of material from a holding cell in the reject emplacement area.

On Friday it said that the site was stabilised and the spill contained.

“Our immediate priority is to minimise any impact to the environment, establishing how and why this incident has occurred will be part of an extensive investigation,” Centennial said on Thursday.

While some media reports claimed the mine was shut down after the incident, this was not the case.

“Clarence was already on a one week scheduled shutdown this week,” a Centennial spokeswoman told ICN on Friday.

“Therefore this is no impact on production.”

Coal-hating conservationists quickly claimed the coal/water spill was "equivalent to a giant oil spill", according to the ABC.