The Federal Government has given conditional environmental approval  to the Xstrata Coal's proposed mine at Wandoan on Queensland's Western Darling Downs.


The mine would produce 30-million tonnes a year but has the potential to expand to 100-million tonnes a year, making it the largest in the Southern Hemisphere.


The mining lease application area covers approximately 32,000 hectares.  The proposed mine would include an open-cut coal mine, a coal handling and preparation plant, and support facilities. 


The approval covers the construction and operations of an open-cut coal mine and supporting infrastructure in the Mining Lease Application areas immediately west of Wandoan, construction and operation of an underground water supply pipeline, raising of the existing Glebe Weir and construction of an associated pipeline to transport water from the Dawson River to the proposed Wandoan Coal Mine.


The Federal Government’s approval is conditional on Xstrata Coal implementing measures to protect biodiversity and will allow Xstrata Coal to proceed with the final stage of the Mining Lease application.


The company says it will make a final investment decision later this year.


Work on the project was suspended last year because of concerns about the Federal Government's proposed mining tax, but Xstrata spokesman James Rickards says it is now back on track.


"We remain committed to the Wandoan project," he said.


Environment group Friends of the Earth has launched legal action to stop the mine, while some landholders are still concerned about the environmental impacts of the project.