Seabed phosphate mine developer Chatham Rock Phosphate's more than $33 million project has been refused marine consent, by the Environmental Protection Authority.
Chatham's shares crashed following the announcement, plunging from 20c to 1.3c.
The future of any seabed exploration for mining in New Zealand now appears in jeopardy, after the EPA rejected the first two, separate sea bed proposals, which collectively spent more than $90 million in working towards marine consent applications.
Chatham Rock has three weeks to lodge a High Court appeal, which can be on a point of law only.
The 300-page EPA decision cited destruction by the suction dredge's drag head of the seabed habitat, its inability to self-rejuvenate and the effects of the plume of returned sediment as key reasons for the rejection.
Chatham Rock managing director Chris Castle said he was ''aghast'' at the decision, which would make it ''even harder, if not impossible'' for companies to attract capital for new projects in New Zealand.
''The entire Government process, and the EPA in particular, seems afraid to say yes to any project that involves any kind of environmental impact and that is simply not good enough if we are to provide a future for our country's young people,'' he said in a statement.
''If we can't succeed having invested $33 million over seven years, then obviously the Government is not serious about economic development,'' Mr Castle said.
Chatham Rock needed time to consider its options -
a High Court appeal, resubmitting an application or ''walking away'' - Mr Castle said.
EPA applications and assessment general manager Sarah Gardner said the EPA's decision-making board had decided sea bed mining would cause significant and permanent adverse effects on the sea bed environment on Chatham Rise.
''This included communities dominated by protected stony corals which were potentially unique to the Chatham Rise and which the decision-making committee concluded were rare and vulnerable ecosystems,'' she said.
Ms Gardner said Chatham had provided the best information available, but there remained ''uncertainties'', such as ''ground truthing'' models of the different environmental effects.
She said mining would effectively result in the destruction of stony corals' habitat.
Asked what the EPA's ''message'' - in two sea bed refusals - was to prospective exploration companies, Ms Gardner said any new application would be ''considered on its own merits'', noting other marine EPA applications had not been refused, but confirmed they were for oil and gas exploration, not sea bed mining.
In July last year, in the EPA's maiden decision, it declined Trans-Tasman Resource's application to mine iron sands off the Taranaki coast, a project which Trans-Tasman had spent $60 million over seven years trying to develop.
The Trans-Tasman proposal
galvanised thousands of people to protest. The company abandoned its High Court appeal in December.
Unlike the thousands of submissions on the Trans-Tasman proposal, Chatham Rock's prompted 294 submissions, two-thirds of which opposed it.
The hearings ran for about 10 weeks, at various locations, until mid-November.
