Queensland’s environment department will not grant approvals for the proposed $900 million expansion of the New Acland coal mine, leaving hundreds of jobs in limbo.

The department has decided against granting an environmental authority for the controversial Darling Downs project, necessary for New Hope – the parent company of New Acland Coal – to seek a mining lease.

Wednesday’s decision to refuse the application was in line with the Land Court’s May 2017 recommendation that Mines Minister Anthony Lynham reject the Stage 3 expansion.

“This followed 99 days of expert and law witness testimony regarding the potential impacts of the project,” the department said.

In a statement to the Australian Stock Exchange, New Hope Coal said it was disappointed by the outcome and would consider its options in response.

“The company is committed to securing approval for this project and in doing so being able to provide ongoing employment for the approximately 300 employees and 500 contractors currently engaged at the New Acland Coal Mine,” the statement read.

Environmentalists cheered the department’s decision on Wednesday.

“Today’s decision is not just a win for the Acland farmers, but a win for all farming communities, a win for trust in government and a win for proper legal process in our state,” Environmental Defender’s Office chief executive Jo-Anne Bragg said.

Community group Oakey Coal Action Alliance had been fighting to stop New Hope’s mine from encroaching on agricultural land, arguing it posed too great a risk to water, air quality and farming.

Land Court member Paul Smith found despite its long-term economic value, the expanded mine’s potentially adverse effect on the groundwater for hundreds of years to come was sufficient to warrant its rejection.

The Queensland Resource Council branded it a “very surprising decision” which put 700-plus jobs at risk and would have devastating flow-on effects for the local community.

“Yet again regional jobs have been dealt a major blow,” QRC boss Ian Macfarlane said.

“This project is vital to the Darling Downs and would create a further 2300 indirect jobs and create $12 billion in economic benefits over the life of the project.”

New Acland Coal applied for a judicial review of the Land Court’s decision, which could invalidate the department’s decision, with a Queensland Supreme Court hearing set down for March 19.

Mr Lynham is yet to rule on whether to grant the required mining leases.