The comments were made in an amendment report for the mine's owner, chinese-owned Yancoal. The report was in response to criticism of the company's original proposal and from the government's own biodiversity experts. Yancoal is aiming to expand the site by 675 hectares following the submission period where 73 of the submissions received opposed the expansion.

The the proposed expansion would see the extension of the open cut operations south of one of the existing pits (known as OC3) as well as develop four new pits east of OC3. Critically, a report by the mine found that 113 hectares of koala habitat would be cleared as part of the expansion.

If approved, up to 30 million tonnes of coal could be extracted by the mine, making it one of the biggest in Australia.

Mudgee District Environment Group (MDEG) opposes the proposed expansion. Rosemary Hadaway, Chair of MDEG said the mine had already done enough damage.

"There is no reason for the Yancoal Moolarben Mine to continue expanding into the Moolarben Valley close to the Munghorn Gap Nature Reserve," she said.

"The impacts of the current approved mine on biodiversity, water and the community are already enormous.

"Expanding into the southern end of the Moolarben Valley is a step too far. The bushland contains critically endangered species and provides food sources for Koala, Regent Honeyeater and other native animals threatened with extinction. No amount of biodiversity offsets can replace the existing environment."

In response to concerns raised by the community, a Yancoal spokesperson said the company revised the project design to ensure that the project will deliver a nature-positive outcome.

"Changes made to minimise biodiversity impacts include: reducing the disturbance footprint; increasing existing vegetation enhancement areas; and increasing proposed rehabilitation of native woodland," the spokesperson said.

"Overall, Yancoal has reduced the disturbance footprint of the extension project by 18 per cent. These amendments to the project address particular issues related to biodiversity and the local koala population.

"Residual potential impacts on biodiversity would be offset in accordance with the NSW Biodiversity Conservation Act 2016. To secure the project's total offset liability for the koala, Yancoal is pursuing land-based offset options using Moolarben-owned land in the region."

In a recent company newsletter, Yancoal said it 'considers the additional amendments strike an appropriate balance between environmental, social and economic outcomes for Moolarben.

A Minerals Council survey found that the $1.2 billion of direct spending of the 28 participating mining companies in the last financial year contributed 19.2 per cent of the GRP of the Central West region's economy during the 2022/23 financial year.

Cate Faehrmann, Greens MP and Mining, Coal and Gas spokesperson said the Moolarben extension, with its adjusted parameters, still poses an unacceptable risk.

"This is death by open cut," Ms Faehrmann said.

"It's unacceptable because it clears habitat that even Yancoal's own report says is potentially critical to the survival of koalas as a species - not to mention its vital importance to regent honeyeaters, gang gang cockatoos and other threatened species.

"It's located right up against the Munghorn Gap Nature Reserve for goodness' sake. This is a terrible place to consider mining.

"We now have legislated net zero targets in NSW that acknowledge the critical need to act on climate change.

"It is shameful that the Government is still approving coal projects in a climate emergency at the same time they are fast-tracking renewable energy projects in the region. It's time to make the transition."

"This revised project proposal by Yancoal is still, by its own admission, going to clear habitat critical to the survival of the koala and the regent honeyeater," Lock the Gate Alliance National Coordinator Carmel Flint said.

"The timing of this report highlights the contradiction between the NSW Minns Government consulting on its Koala Strategy while also allowing big coal expansions that threaten koala populations to move through the assessment process.

"Koalas, and other threatened species, don't stand a chance if the Minns Government continues to allow coal companies to clear habitat that is critical to their survival while also digging up this polluting fossil fuel that is driving climate change."