The state government’s planning assessment commission refused this week an application by Ashton Coal Operations to extract 16.5million tonnes of coal over seven years from 315hectares south of the village.

An opponent of the plan, Wendy Bowman said the decision indicated that years of community concern appeared to be finally seeping through to state government decision-makers.

On hearing the decision, company officials announced immediately that they would appeal.

Ashton media spokesman Brett Lavaring said the refusal jeopardised more than 50 existing Ashton jobs.

Officials believed they had a strong case for the project to proceed as it would help maintain 160 jobs on the site and 680 indirect jobs across the region.

New South Wales planning department officials supported the proposal, saying they were satisfied that its “residual impacts” could be adequately mitigated, managed, offset or compensated.

New South Wales Health officials rejected the project, saying it would generate significant noise and dust problems and its cumulative impacts, including the emission of fine dust particles known as PM10s, were “unacceptable”.

New South Wales Office of Water officials were concerned about the pit’s impact on water flows, particularly in Glennies Creek and the Hunter River, and its potential to cause long-term salty water problems.

The planning commission’s determination said in part “on balance, the benefits of the project do not outweigh the combined risks from the project’s potential impacts on Glennies Creek and its associated water resources and its potential dust and noise emissions”.

This was the second time the commission has knocked back a Hunter Valley coalmining proposal, the initial one was the Bickham pit, near Scone, in May last year.

Mr Lavaring disputed the planning commission’s view, saying Department of Primary Industries officials had “validated” modelling by Ashton representatives to address concerns raised by Office of Water and Health Department officials.

Mrs Bowman said refusal of the Ashton expansion had elated residents who had been fighting for the return of the Camberwell Common, which former lands minister Tony Kelly took out of community control and handed to the mining company last year.

“This decision finally recognises the importance of our water and the alarming health impacts that the coalmining industry has been having on the Hunter community,” Mrs Bowman said.