China's Shenhua Group has obtained conditional approval from the Australian Government for its proposed $1.2bn Watermark coal mine.
Under the proposal, Shenhua Group plans to construct and operate an open-cut coal mine, as well as associated infrastructure, including a coal handling operation and preparation plant.
In addition, upgrades will be made to transport infrastructure about 3km to the west of Breeza and 25kn south-east of Gunnedah, New South Wales.
Australian Environment Minister Greg Hunt approved the project with 18 conditions.
Under the approval, Shenhua Group is permitted to extract 268 million tonnes of coal until 2046.
According to Hunt, the mine would be restricted to the ridge country around Mount Watermark.
However, should the company find that any agricultural water supplies were affected due to the mine, it should halt operations.
Hunt said in a statement: "There will be no impact on the availability of water for agriculture.
"The conditions I have imposed limit water use to less than 0.09 per cent of available groundwater, that's less than 1/1000th of the resource and less than the amount of water from one agricultural bore."
Shenhua Group project manager Paul Jackson said: "Today's decision to approve the Watermark Project is the final, irrefutable confirmation there will be no adverse impacts on the region's groundwater and impacts on sensitive ecological areas have been appropriately managed and offset."
Following federal approval, the company now plans to develop operating and management plans to be ready for assessment by the end of 2015.
The project was opposed by a farm group claiming that it would destroy some of Australia's productive farmlands.