Shenhua's Watermark mine is dead, with government to ban mining in the Liverpool Plains 'forever and a day': Barilaro

Deputy Premier John Barilaro travelled to Breeza on Tuesday to tell a crowd of about 50 local farmers and Indigenous elders, who've spent years campaigning against the mine, that "mining on the Liverpool Plains will be prohibited, full stop. From a small quarry through to an underground mine".

He announced the state had yesterday paid $100 million to buy back the Chinese company's exploration licence, and that development consent for the project would also be quashed.

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"As of 4.30pm yesterday the Shenhua company has signed with the NSW government where we will now extinguish the mining licence forever and a day," he said.

"The development consent will also be relinquished.

"What does this mean? It means there's no mining here on the Liverpool Plains, it's the end of the saga. Full stop. Full stop."

Government meanwhile, is negotiating with gas company Santos to quash petroleum exploration licences that cover the land, he said.

Mr Barilaro said government would not have to buy back any of the local gas exploration leases.

"They're two very different situations. Shenhua, if I guess this right, they would have spent $600m on this project already," he said.

"The reality is this $100m payment - and remember we've received payments from Shenhua over that time - is really a reimbursement of some level. It's a deal worth every cent."

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The state government refunded $262 million to Shenhua to buy back 51 per cent of the mine in 2017.

The deal came after six months of negotiations with the giant Chinese mining company 'behind closed doors'.

Mr Barilaro said the announcement was about the "balance that I've always seen as the resources minister".

Planning minister Rob Stokes said the area "will never be subject to mining activity into the future".

"The whole area that was originally covered by the exploration licence - that entire area will now be prohibited to coal and gas mining under the mining state environmental planning policy," he said.

"That is a terrific result. As planning minister I'm delighted to be able to be in a position to deliver what the community has wanted for a very long time.

"This food bowl of Australia will be protected from mining activity for generations to come."

Local farmers had long opposed the project, fearing it would deny the region's rich black soil to agricultural food production, or damage local water aquifers.

Tamworth MP Kevin Anderson said the 13-year-old project had caused "heartache to many".

Mr Barilaro denied the cancellation was a cynical ploy to help win the upcoming Upper Hunter by-election.

"Think about it, the by-election in the Upper Hunter started a referendum on coal mining," he said.

"This would be detrimental to my campaign if you actually thought about it through that lens.

"The timing of the by-election is by luck or by chance, or in my case, unlucky."

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He denied holding off or speeding up signing the deal in order to make the by-election.

A spokesperson for Shenhua said the decision to cease the Watermark project was based on "shifting economic and social circumstances since the project first commenced in 2008".

Mr Barilaro told an estimates hearing in February government was still working through its due diligence before approving the project.

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