The planning system in New South Wales is in chaos following a Supreme Court of Appeal decision which upheld an earlier judgement disallowing an expansion of a Rio Tinto mine even though the project had received approval to proceed from the state’s government more than two years ago, a key lobby group associated with the resources sector says.

Industry lobby group NSW Mining says the latest decision, under which an appeal by the Bulga Milbrodale Progress Association against the Planning Assessment Commission’s May 2012 decision to approve an expansion to Rio’s Mount Thorley Warkworth mine about 200 km North of Sydney, creates significant uncertainty and embodies ‘everything wrong with the NSW planning system’.

“What kind of message does it send about investing in NSW when a project proponent can spend over three years in the planning system, receive approvals at every level, and then be overturned by a single judge in the Land and Environment Court a year later?” NSW Minerals Council CEO, Stephen Galilee said in a statement.

The case in question concerned a proposed expansion of the north and west pits of the mine as well as completion, rehabilitation and other pits and the extension of the life of the mine from 2021 until 2033.

Whilst approval for the project was granted in 2012, legal history was made last year when the Supreme Court overturned that decision, saying the expansion – which residents from the tiny village of Bulga (population 350) say would involve demolition of part of their village – had significant and unacceptable impacts on biological diversity, noise and social impacts.

An appeal of that decision by Rio was dismissed on Monday in the Court of Appeal – the miner having claimed it had been denied procedural fairness in respect of a number of factual matters relating to its application and that the judge had erred in law by giving inadequate weight to the Director-General’s report and not having regard for the Mining Act 1982.

Whilst the decision is no doubt welcomed by Bulga residents, it has raised the level of uncertainty surrounding environment approvals not just in mining projects but also in other areas of construction such as roads, rail, power and water related infrastructure.

In a statement, the state government said it will consider the implications of the decision.

Rio, meanwhile, has submitted a new application which will be assessed under new government rules which make economic benefits of mining a primary consideration in environmental approval decisions.

If granted, the new application would extend the mine’s life until 2035.