The Safeguarding Agricultural Land and Water from Mining Bill, backed by Liberal and National MPs, was defeated in the Upper House yesterday by just one vote. The Shooters Party and Fred Nile voted with the government against the bill.

The bill had called for a ban on coal mining within 1 kilometre of rivers and aquifiers that feed prime agricultural land.

More than 200 farmers protested outside the state Parliament yesterday morning, with about 30 protestors walking out of the public gallery during Nile’s speech shouting “shame, shame”

"The government pocketed $A99 million from BHP Billiton and $300 million from China Shenhua to explore the Liverpool Plains areas,” Greens MP Lee Rhiannon said.

"Windfalls from mining have blinded the government to the big picture issues of food security and climate change.”

However, NSW Mineral Resources Minister Ian Macdonald said the bill would destroy mining in NSW, causing job losses and slowing economic growth.

Macdonald yesterday announced a water study in the Namoi water catchment to be chaired by former NSW Farmers Association president Mal Peters.

“Farmers and miners need to work together for the good of their communities and the state. This is an important step forward,” Macdonald said.

The study will identify any risks associated with mining and coal development on water resources in the area.

Macdonald said the Australian government, through the National Water Commission, had also commenced a two-year project into the potential local and cumulative impact of mining on groundwater resources.

“An exploration licence is not an approval to develop a mine. Any future mining proposal must obtain approval under the state’s comprehensive and rigorous planning legislation,” Macdonald said.

“If and when the mines are approved, it will bring upgraded infrastructure for the Liverpool Plains area and thousands of jobs for the area.”

NSW Minerals Council chief executive Dr Nikki Williams said the water study’s focus on data and science was a welcome contrast to the debate of the Greens’ Bill.

“While it is pleasing that the Bill was defeated, it is disappointing that the NSW Coalition failed to show leadership on the issue," Williams said.

“By using this issue as a political football, tensions are increased and the emotions of people from both mining and farming are betrayed.”

Williams said the Bill was "irresponsible, unnecessary and increased sovereign risk in NSW".

Despite losing the battle with yesterday’s bill, the Caroona Coal Action Group said it welcomed the independent water study.

“It is obvious now that the Labor government no longer has a clear mandate for its mining policies on prime agricultural lands. We will keep fighting until such an amendment is passed ensuring this country's clean food and water supplies are protected from any inappropriate or contaminating development,” CCAG said today.

Tension between farmers and coal explorers in the Liverpool Plains has been a long-standing issue.

BHP is currently targeting ridge country of Doona Point, Nicholas Ridge and George’s Island for exploration with potential for longwall mining.

“While there are significant coal deposits under the flood plains, due to the sensitivity of the flood plain and associated agriculture to subsidence, these coal deposits cannot be efficiently extracted with current longwall technology,” Caroona coal project general manager Stephen David said at the time.