MELBOURNE (Reuters) - An environmental group has gone to court to overturn the Australian government's approval of two Whitehaven Coal Ltd mines, potentially stalling its biggest growth project, the $707 million Maules Creek mine.
Whitehaven, Australia's second biggest independent coal miner, said on Friday that for the time being the court fight would not stop work on Maules Creek in New South Wales, a metallurgical coal mine crucial to cutting its exposure to the depressed thermal coal market.
Whitehaven won final environmental approvals for Maules Creek in early July after several delays, and aims to have the first coal sales from the mine in the second half of 2014.
That approval and the federal environment minister's nod for Whitehaven's Boggabri mine are being challenged in the Federal Court of New South Wales by a group that says it's concerned about forest destruction, a drop in groundwater and coal dust on farms from the open-pit mine.
"We are challenging the approval of the Maules Creek and Boggabri coal mines because of the dodgy process by which they were approved and the devastating impacts they will have," Phil Spark, a spokesman for the Northern Inland Council for the Environment, said in a statement.
The group believes the federal environment minister's decision was flawed according to the Environment Protection and Biodiversity Conservation Act.
Whitehaven shares fell 2 cents to A$2.12, lagging a 0.1 percent gain in the broader market.
The company said the court fight was targeting a legal error, not the merit of the government's decision to approve the mine, and so work at Maules Creek could proceed pending the outcome of the case.
"The mere commencement of the litigation does not preclude the company from relying on the approval to proceed with construction," Whitehaven said in a statement to the Australian stock exchange.
However Whitehaven was eager to see the issue resolved as soon as possible and said if the court found the environment minister had made a legal error, the company would ask the government to fix the mistake and grant a new approval swiftly.
Whitehaven contrasted this court case with another environmental fight which has stalled bigger rival Rio Tinto's Warworth mine extension, also in the state of New South Wales.
That challenge is based on the merit of the state's decision to approve Rio's project.
A lawyer for the environmental group said technically it is possible the court action could result in a rejection of the Maules Creek project.
"If the court invalidates the approval, and the matter goes back to the minister for the environment, then certainly the minister can make a decision to approve or refuse the project," said Sue Higginson, a lawyer with the Environmental Defender's Office.
(Reporting by Sonali Paul; Editing by Muralikumar Anantharaman and Stephen Coates)