NSW’s Independent Planning Commission (IPC) has green-lit the expansion of a coal mine above Sydney’s water catchment.

The IPC has approved Wollongong Coal’s plan to extract an additional 3.7 million tonnes of metallurgical coal from its Russell Vale colliery over the next five years.

The mine expansion will allegedly provide up to $174 million in extra revenue for NSW while also employing about 205 people.

The IPC concedes that the expansion will cause amenity and environmental issues, but says its 118 conditions will see impacts appropriately managed and mitigated.

The project will generate about 1.5 million tonnes of greenhouse gas emissions.

“On balance, and when weighed against the objects of the [Environmental Planning and Assessment] Act, ecologically sustainable development principles, the relevant policy framework, and socio-economic benefits, the impacts associated with the project are acceptable and the project is in the public interest,” the IPC said in a statement.

It is a bold assumption given that Wollongong Coal recently voted to remove itself from the Australian Securities Exchange (ASX) amid mounting debts.

Nic Clyde from anti-fossil fuel group Lock the Gate says different parts of the NSW Government are not in communication.

“It's ludicrous that we could find ourselves in the absolutely absurd position of giving a company approval to develop a project, and then having a completely separate government process finding that the operator that wants to develop the project isn't fit and proper to do so,” he told the ABC.

Residents and community groups aired concerns in public hearings about potential impacts on Sydney's drinking water catchment.

But Wollongong Coal insists that the bord-and-pillar method of mining “engineers out” the major causes of damage to waterways and local ecosystems.

The IPC says the mining coming will have to ensure negligible leakage and negligible reductions in water quality of nearby reservoirs.