Government agency NZ Petroleum and Minerals recently signalled to Terra Firma Ltd it will not allow the Spring Creek mine behind Dunollie to reopen.
Terra Firma did not intend to dig coal for burning, but for silicon extraction to build the likes of solar panels.
The news has horrified the mining industry.
The former Solid Energy mine was closed in 2017 and almost all of the infrastructure remains in place.
The Greymouth mayor, National Party MP and Development West Coast (DWC) have united to express their frustration at the decision, and Opposition leader Christopher Luxon has also been briefed.
Minerals West Coast said it was a missed opportunity, and the mining company said it was frustrated and bewildered.
Former State-owned Solid Energy put the mine into "care and maintenance" in September 2012, making 222 mine staff and 130 contractors redundant.
It was closed altogether five years later, and the pit was partially flooded.
Birchfields kept the above-ground site and infrastructure.
Terra Firma proposed draining the mine and reopening it with a smaller operation, targeting the specialist market of silicon manufacturing. It would employ 60 staff when in production.
The minerals permit application was lodged with NZ Petroleum and Minerals in July 2020, but last week the word was not good.
Terra Firma spokesman Lincoln Smith said he was "extremely frustrated and bewildered by the Government's intention to decline."
"Having reviewed our application, and the reasons for proposing to decline it, I can't see any justification for this other than a philosophical opposition to mining."
It had intended to operate the mine on a smaller scale using what it considered was a simpler and safer method.
The characteristics of Spring Creek coal were "incredibly rare internationally", and an essential ingredient in the manufacturing of silicon metal used in solar panels, semi-conductors and aluminium alloys.
Mr Smith said the company remained hopeful it could work with New Zealand Petroleum and Minerals to ensure the permit was granted.
Minerals West Coast manager Patrick Phelps said it was a missed opportunity that would have created 60 jobs, paying on average well over $100,000 a year.
"You'd need about 150 jobs in retail or accommodation and food service to achieve the same wage injection," Mr Phelps said.
Mr Phelps said the resource consent process through the Resource Management Act could have addressed any environmental considerations.
He understood that Work Safe NZ had advised it had no safety concerns about the permit being granted to Terra Firma.
— The Greymouth Star
