Officials are investigating a proposal to turn Pike River mine into an opencast coal pit.
The proposal from Solid Energy is seeking permission to change its mining and prospecting permits in order to make the mine profitable including "consent for an opencast mine in or adjacent to the [Paparoa] National Park,” the New Zealand Herald reported.
The application is investigating whether an opencast mine is viable – raising questions from evironmentalists over whether the government will return to its controversial plan to mine in conservation land.
Government backing would be required to turn the defunct underground mine, at which 29 men died in 2010, into a larger open mine.
According to the New Zealand Herald, officials at the Ministry of Business, Innovation and Employment have been studying the application for eight months, but Energy and Resources Minister Simon Bridges refused to answer "hypothetical" questions about the proposal.
The proposal by Solid Energy follows the discovery of its shaky financial state, and the loss of around 400 jobs at mines on the West Coast at Spring Hill.
Pike River Coal's receivers PricewaterhouseCoopers sold the embattled coal mine to New Zealand's Solid Energy last year.
Greymouth District Mayor Tony Kokshoorn said mining had been the "jewel in the crown" of the West Coast.
"There's only one feeling on the West Coast – if we can opencast it then we should opencast it. Everyone is in favour of it if it is feasible."
Solid Energy applied for the change to its permit last June, saying it wants to find a "financially credible" way to extract coal.
The application stated the area was "highly challenging" although Solid Energy had "considered an option for an opencast mine in the shallower areas of the [mining] permit, allowing for mining the escarpment within the Paparoa National Park".
It said an opencast mine could go ahead pending the "removal of the constraints implied by the national park."
The company said coal was available "much lower than that indicated by Pike River Coal" and that the easy to access deposits were at a "relatively shallow" depth of 50m-150m.
West Coast Green Party MP Kevin Hague said mining activity in the national park is forbidden.
"That's absolutely forbidden. It could only happen if Simon Bridges makes it happen."
Opposition MPs are calling on Bridges to make his position clear.
"If they're against it, why not tell Solid Energy not to waste their time," Labour's conservation spokesman Ruth Dyson said.
A panel of mining experts met in Christchurch last week to work on a plan to re-enter Pike River coalmine.
29 men killed when the underground mine exploded in November 2010 are still inside the mine.
New Zealand Prime Minister John Key pushed for the meeting last year saying a re-entry plan was essential so families could get "closure one way or another as soon as reasonably possible".
Dangerous conditions inside the mine prevented any rescue attempts after the explosion.
Since then recovery missions have stalled and mines rescue have only reached 300m along the mine’s tunnel while they built a temporary seal in 2011.