THE massive 32,000-hectare Wandoan Coal Project will go ahead after Premier Campbell Newman backed the Land Court's decision.
Xstrata's planned thermal coal mine near the Wandoan township - about 280km north-west of Toowoomba - was taken to court by environmental protection group Friends of the Earth and residents near the site.
The group fought the mine's development, which would export at least 22 million tonnes of coal each year, saying the eventual coal burning would contribute to climate change.
Residents were demanding to have their properties cut from Xstrata's leasing area.
The new Premier said with the court generally upholding the approval given by the former Bligh government, the project was going ahead.
He said the project was "very important for the economic future of Queensland" with at least 750 permanent jobs to be created on site.
"What we will be doing as a government is making sure that people are treated fairly and reasonably," Mr Newman said.
We'll also be making sure that through our Royalties for the Regions Program people see the benefits of these projects in regional Queensland, because they are the ones who are putting up with the impacts."
Land Court President Carmel MacDonald found the three blocks of land would be kept outside the project, but otherwise suggested the new LNP government allow the mine.
Xstrata Coal Queensland chief operating officer Reinhold Schmidt trumpeted the Swiss giant's win as proof its environmental studies were legitimate.
"(The result) followed a thorough and rigorous environmental assessment and review process throughout the development of the Wandoan Coal Project," Mr Schmidt said.
"Xstrata Coal has acted openly and honestly throughout each state of the mining lease application process in accordance with all legislative requirements."
If allowed, the project will eventually be able to export up to 30 million tonnes of coal per year as it expands from its early target of 22 million.
Xstrata will employ 844 initially on the site, of which more than 750 would be permanent.
Friends of the Earth spokesman Dr Bradley Smith said he was disappointed with the court defeat.
"It's unfortunate that our laws allow multi-billion dollar companies like Xstrata to ignore the outcomes of their reckless actions.
Mr Smith said Friends of the Earth was "weighing up our opportunities for appeal with our legal team".