The Environmental Protection Authority has declined Trans-Tasman Resources' application to mine ironsands off the South Taranaki Bight because of concerns about the effects on the environment.
Citing "uncertainty around the scope and significance of the potential adverse environmental effects" and how the mining would affect interests such as the fishing and iwi, the authority was not satisfied the life-supporting capacity of the environment would be safeguarded, or that adverse effects could be avoided, remedied or mitigated.
TTR, which sought a marine consent to mine 66sq km of the seabed, has 15 working days to appeal the decision.
Company chief executive Tim Crossley said the decision was "extremely disappointing".
"We have put a significant amount of time and effort into this project, including consulting with iwi and local communities and undertaking detailed scientific research to assess environmental impacts," he said, adding TTR had spent $60 million on the project.
He said the company would consider its future in the coming days.
The authority received 4850 submissions and held hearings in Wellington, Hamilton, Wanganui, Hawera and New Plymouth.
Phil MCabe, chairman of anti-mining group KASM, was delighted by the decision. "The points they mention were the things we talked about - the unknown effect on the environment and the quality of the information provided by TTR."
Graham Pearson of Castlecliff Coast Care was also pleased the authority had listened to submitters. "We appreciate they came to Wanganui to hear what we had to say," said Mr Pearson, who didn't think it would mean a loss of jobs for Wanganui.
"Most of the processing would have been done offshore, so maybe there would be a few jobs supplying the ship. But first they talked 100 jobs and then it went down to a few."
Whanganui MP Chester Borrows was disappointed for TTR and said the electorate needed all the job opportunities it could get.
"I was in favour of the project if it could be shown there was minimal environmental risk and the benefits to the community and country were worth that minimal risk," he said.
Te Tai Hauauru Labour candidate Adrian Rurawhe welcomed the decision: "It would've had a high impact on the environment. The job thing is a big issue but not at the expense of the environment."
Iwi Ngati Ruanui also backed the authority's move. Chief executive Debbie Ngarewa-Packer said the mining methodology was unproven.
Whanganui Employers' Chamber of Commerce president Craig Hanford said the addition of well-paid jobs to the wider region would have been beneficial.
"I have seen some work TTR did around mitigating environmental concerns. It was something they were taking very seriously, but there were definitely issues around the 'plume'," he said.
Labour candidate for Whanganui Hamish McDouall was "pretty pleased" with the outcome. "The business model TTR were promoting was flawed," he said.
Mr McDouall was not opposed to mining provided it met environmental controls.