Doubts over govt's political will to use new power to cancel Shenhua coal mine

In less than six months, the state government will be able to scrap the development if the company fails to apply for a mining licence.

Before it can get that licence, Shenhua has to finish at least eight environmental studies, which must be approved by the government.

Lock the Gate spokeswoman Georgina Woods said the government had had multiple opportunities in the past to "correct its mistake", so there was "good reason for scepticism" about whether it would use the cancellation clause.

"That said, our hope is that government created this deadline as a signal to Shenhua that it did intend to withdraw or cancel its licence," Ms Woods said.

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In 2017, the state government faced a backlash when, instead of cancelling the mine's expired exploration licence, it bought back half of it for $262 million.

"It's possible that the previous cancellation opportunity didn't seem clear enough to the government," Ms Woods said.

"Perhaps they wanted to give them one more chance. Shenhua hasn't taken that opportunity.

"A lot of time has passed and they still haven't finished a number of environmental plans."

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Shenhua is yet to finish environmental management plans (EMPs) for water, biodiversity, rehabilitation, heritage, noise, air quality, blasting and traffic.

The company said its "target date for approvals of all the EMPs is June 30, 2020" and construction was expected to start in "early 2021".

There has been speculation the NSW government has hesitated to cancel Shenhua's licence because the company is owned by the Chinese government.

"I would hope foreign relation considerations wouldn't trump public interest," Ms Woods said.

"We don't want to be in a situation where a foreign nation or company can hold the government over a barrel on matters of such importance.

"Shenhua seems ambivalent about the project, but public interest has not declined."