Deputy Premier John Barilaro has met industry, union and business representatives in Wollongong in a ramping up of efforts to overturn a controversial scuttling of the Dendrobium Mine expansion.
The Independent Planning Commission (IPC) knocked back the South32 proposal on February 5, due to concerns about the effects on the water catchment.
South32, which employs up to 400 people at Dendrobium, wanted to extend the mine's life to 2048 and extract an additional 78 million tonnes of coal from two new areas near Avon and Cordeaux dams.
The mining minister held a roundtable at BlueScope Steel on Monday to discuss the impacts of the decision which he said had "significant ramifications right across the Illawarra, if not the state and the nation".
"I'm taking every opportunity to make sure we find a way forward," he told media. "The idea we can transition away from the coal industry, mining industry, steel industry, overnight is ridiculous.
"In time, the decades ahead, of course there's going to be transition but right now we have the opportunity to shore up decades worth of coal supply and secure those skilled jobs in the region."
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Mr Barilaro said the decision could see the loss of "750 coal jobs, 3000 steel jobs" and represent a $2 billion hit to the Illawarra economy.
"I know there's always concern in the community about mining, co-existence and the impacts on the environment," he said. "At no point does anyone, any of the stakeholders, anybody in government, want to see a detrimental outcome either to Sydney's water catchment (or) the environment. But ... we've got to balance the advantages and the opportunities for the economy.
"We know that we can co-exist, we can put mitigation in place to protect water, to protect the catchment, but at the same time mining areas that we've seen mining for more than 100 years."
The Department of Planning, Industry and Environment had recommended approval of the extension, saying the benefits outweighed the risks to the catchment. However the plan was opposed by WaterNSW.
"In my mind there was a failure in that there was an opportunity to work through those issues within the process we have, and within the IPC," Mr Barilaro said.
He said he would be raising the issue in state cabinet, and seeking legal advice in order to "chart a pathway" forward.
Representatives from Bluescope, South32, CFMEU, AWU, Illawarra Business Chamber and state Labor MPs Ryan Park and Paul Scully were among those involved in the discussions.
But Lock the Gate Alliance NSW spokesperson Nic Clyde said Mr Barilaro's undermining of the IPC's independence was unacceptable.
"It's telling that Mr Barilaro appears to have only met with stakeholders who want to build the destructive coal mine extension, not the agency responsible for managing and safeguarding the region's drinking water or the scientists who gave frank and fearless advice to the IPC," Mr Clyde said.