There has been a setback to Clive Palmer's plans to open a new coal mine in Central Queensland.
The businessman was planning to build an open-cut coal mine about 130 kilometres north-west of Rockhampton.
The site is 10km from the Great Barrier Reef Heritage Area.
A report by the Department of Environment and Science, which assessed the project has found it is "not suitable to proceed".
In a statement the department said the project poses a number of unacceptable risks due to its close proximity to the Great Barrier Reef Marine Park, World Heritage Area, and other waterways.
The proposal will now be considered by Federal Environment Minister Sussan Ley and it's understood she has 30 business days to approve or reject it.
Capricorn Conservation Council's Doctor Coral Rowston says the report is a step in the right direction in preventing further damage to the environment.
"There was going to be a flow out of poor water quality out into the Broad Sound wetlands area and Great Barrier Reef, and that was obviously going to have impacts on matters of state environmental significance," Dr Rowston says.
"In the worst case scenario if the impacts to the wetlands and reef were significant, that would have impacted on the fish habitat area and commercial fishing region, as well as all the tourism operators."
The Australian Marine Conservation Society says the State Government has made the right decision.
“We are relieved they have listened to the warnings from expert scientists that building a huge open-cut coal mine so close to our Reef would cause serious and irreversible damage to a variety of important habitats, including important turtle and dugong strongholds,” said the Society’s Great Barrier Reef campaigner David Cazzulino.
“These Federal Government appointed experts warned that they “cannot envisage any feasible mitigation measures, including offsets, that could safeguard these irreplaceable and internationally significant ecological assets,” he says.
“We urge Minister Ley to listen to her government’s own expert scientists, and to the community, and reject this disastrous mine for the sake of our beautiful Reef.”
The decision comes amid strong community opposition to the mine.
Hundreds of people attended protests in Mackay, Yeppoon and Brisbane recently, and more than 12,000 people have signed a petition opposing the mine.
Clime Palmer has been contacted for comment.