Bathurst Coal couldn't persuade Land Information Minister Eugenie Sage that its plan to buy Solid Energy's mothballed Sullivan Mine on the Denniston Plateau was a good enough deal for New Zealand.
She declined the application using the sensitive land test and said the deal failed to provide a convincing economic benefit or job creation case.
"Given the ongoing volatility of the coal price there is considerable uncertainty about whether the proposal would result in any economic benefit or jobs for the West Coast," Sage said.
"Indeed, Bathurst has itself suspended operations at the larger Escarpment Mine in Denniston."
Solid Energy's creditors will get at least 60 cents in the dollar when the failed state-owned enterprise's mines are all sold, up from the previous range of 45 cents to 55 cents.