Mac Services Group has decided to appeal the decision to reject Gulgong miners’ camp in the Land and Environment Court.
The $26 million temporary workers accommodation proposal was rejected by the Western Region Joint Regional Planning Panel in October.
The proposal was submitted for a site on Black Lead Road, in the Gulgong township of New South Wales to house 400 miners.
Mid-Western Regional Council's general manager, Warwick Bennett, said the decision to appeal is a setback for the community which opposes the development, the ABC reported.
"The MAC Group made a commitment to the council and the community that the community did not want this temporary workers accommodation or miners camp.
"So now they're going to the environment court so yeah we're a little disappointed that they're going to continue to pursue this matter."
The company said the move to challenge the council’s decision was made to enable it to manage an influx of employees in the area.
"We will wait with anticipation for what issues they will be raising in terms of this class one action.” Bennett said.
"We've had no contact at all from the MAC Services Group since the hearing," he concluded.
A court date for the hearing is yet to be announced.
The expansion aimed to double the mine’s production to 20 million tonnes per annum, re-start its open pit operations and add 21 years to the mine’s life.
However, the Ulan mine was recently earmarked for Xstrata job cuts in September.
Speaking to Xstrata spokesperson Francis De Rosa at the time, he told Australian Mining that the company is "currently dealing with a very challenging market and a high Australian dollar, so Xstrata has had to act to ensure the ongoing health of the business.
"This [restructuring] is part of an ongoing review.”