The Planning Assessment Commission has recommended the T4 coal loader on Kooragang Island be approved.
The proposed $5 billion coal loading terminal would see capacity at the port increase by 70 million tonnes.
The PAC acknowledged that world coal demand had waned, and that there was no immediate need for the loading terminal.
However it said the project could go ahead subject to conditions around management of air quality and dust, noise, surface water, ground water, contamination, and visual impact.
It wants Port Waratah Coal Services to demonstrate that the proposed Tomago biodiversity offset area is functioning successfully prior to commencing construction of the coal loader facilities.
“This should ne for a minimum of three years to be confident of documenting at least one successful season of usage by migratory shorebirds that currently use the Kooragang Island site proposed for T4,” PAC said.
The commission also recommended the consent period within which to commence development be halved from 10 years to five.
It said the shorter period was necessary to avoid further extended delays in cost effectively dealing with site contamination and ensure prompt action on biodiversity issues.
Despite receiving many submission expressing concerns about health impacts in relation to coal dust, the PAC said it was satisfied that by concentrating coal handling on Kooragang Island, at a greater distance from residential areas than other existing sources, “T4 could provide greater flexibility to improve air quality in Newcastle residential areas if community expectations and regulatory requirements tighten as expected”.
The PAC also said it did not find a reason to cover coal wagons travelling to the site.
PWCS CEO Hennie du Plooy welcomed PAC’s recommendation.
“We are pleased that we have reached another critical milestone in an assessment process which has taken four years so far,” he said.
“To keep the process moving forward, we will aim to provide a response to the Department of Planning and Environment as promptly as possible, giving careful consideration to the recommendations and how they apply to the Project scope.
“Despite challenging conditions, the Hunter Valley coal industry in 2014 is once again on track to increase output to record levels, reinforcing the need to continue planning for the future growth of coal exports from Newcastle.”
Newcastle Greens Councillor Michael Osborne has accused the PAC of ignoring the concerns of local residents in recommending T4 for approval, ABC reported.
"They've dismissed them or made cursory comment,” Osborne said.
"They certainly haven't rejected the proposal, which should have happened."