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AAP

February 12 2013, 3:17PM

By Nick Perry

CANBERRA, Feb 12 AAP - An investigation will be carried out into claims that Whitehaven Coal provided false information in applying to develop a controversial open-cut mine in northwest NSW.

Federal Environment Minister Tony Burke has granted conditional approval to Whitehaven's Maules Creek coal mine, but says the company cannot proceed with its flagship project until further work is carried out.

It has now emerged the Department of Environment was aware Whitehaven had been accused of providing misleading information in its mine application and that it plans to investigate the claims.

At a Senate hearing on Tuesday, Australian Greens senator Larissa Waters asked if the department was aware of allegations around Whitehaven's pledge to conserve thousands of hectares of forests and natural habitat in exchange for mining rights.

Experts commissioned by the Maules Creek community claim the trees proposed in the company's "offset package" are unsuitable as an ecological replacement for those under threat by the project.

The department's Shane Gaddes said he was aware of the allegations levelled against Whitehaven, but an investigation had not yet begun.

"We will look at this one," Mr Gaddes told a Senate estimates hearing, adding that the department looked into all accusations of this nature.

Senator Waters said she was alarmed the environment minister did not have the requisite certainty before approving large mines in old-growth forests.

The hearing was told it was "unusual" but not unprecedented for a minister to grant approval for a project but retain the power to withdraw it subject to certain conditions being met.

Whitehaven has until December 30 to submit its offset package to the minister for approval, before which the project cannot progress.

Mr Burke said he had taken the "very unusual" step of ordering Whitehaven's proposed offset package be independently audited before he gives final approval.

This was the best and most transparent way of dealing with widespread community concerns around the mine and the offset package.

"Certainly what the community is complaining about, if they read the conditions, they'll actually find their precise concerns have given rise to an independent audit," Mr Burke told reporters in Canberra.

"If their concerns prove true in the independent audit, then the project can't go ahead."

But Maules Creek resident Phil Laird, who met with Mr Burke to discuss concerns, said it did not make sense to approve the mine before examining the offset package.

"If you're going to have a decent approval process, with proper community consultation and proper scrutiny, everything needs to be there before the mine's approved," Mr Laird told AAP.

"I don't think all the information is on the table."

Community and environmental activists fear the project threatens koala habitats, thousands of hectares of old-growth forest and will force farmers off their land through soil and water damage.