The proposed Shenhua coal mine should not go ahead until the NSW government can ensure the protection of koala colonies and habitat, a government inquiry has found.
It is one of 42 recommendations handed down in the NSW Upper House's inquiry into the state's koala populations and their habitat, which was released on Tuesday after a 12-month wait.
The panel said evidence suggested that the Shenhua project was "incompatible with the future existence of the local koala population".
"Shenhua's proposed translocation of the koala population is also an absurd idea, which the method found to be unproven by the committee," the panel said.
"The committee also called for an overhaul of biodiversity offsetting, which has seen coal mine projects able to clear core koala habitat by 'offsetting' this loss with supposed koala habitat in other parts of the state."
This is an extremely significant report with strong recommendations that pull no punches.- NSW Upper House inquiry panel
The panel, chaired by Cate Faehrmann MLC, found that habitat loss and fragmentation was the biggest threat to koalas.
"Without urgent government intervention, the koala will become extinct in NSW before 2050," Ms Faehrmann said in a press conference.
"The message is - there is a lot of work to do now.
"This is an extremely significant report with strong recommendations that pull no punches, but it's important that this report pulls no punches because the government has to hear what is necessary to protect koalas ... this here is the road map."
Ecologist Phil Spark said that successive extreme events in the past had reduced the Gunnedah population by 50 per cent and the western population had become locally extinct.
The report also found that the NSW Koala Strategy failed to protect and stabilise populations across the state, and government departments were in conflict and must work together to save the species.
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