Former federal MP Tony Windsor says he believes the controversial Shenhua Watermark coalmine will not go ahead despite the NSW government rejecting rumours the mine's owners want to exit the project.
The NSW government said on Thursday that Shenhua, the Chinese company behind the Watermark mine, had not asked for its exploration licence to be bought back.
The denial came after Mr Windsor tweeted this week that there was a "very strong rumour" that Shenhua had asked the government to buy back the licence for the proposed Liverpool Plains mine.
Mr Windsor told AAP he had heard rumours about a possible pullout by Shenhua around Canberra.
The mine project is bitterly opposed by the peak NSW farming body, local landholders and environmental groups.
Further questions have been raised by the Chinese government's recently announced three-year moratorium on new coal mines inside China - the impact of which is not clear outside the country.
Coal prices have also suffered significant falls in recent years.
"My guess is one way or another this mine won't proceed, whether through civil disobedience or Chinese pullout," Mr Windsor said.
Shenhua Australia has made no comment on the matter.
Federal environment minister Greg Hunt gave the mine conditional approval last July, then announced during a fiery interview with radio host Alan Jones that he would impose a further hurdle by referring the mine's water management plan for scientific assessment before final approval was granted.
A spokesman for NSW resources minister Anthony Roberts said the state government "has not sought to buy back Shenhua's exploration licence or been asked to buy back the exploration licence by the company".
The spokesman said the Watermark project still needed federal approval of its water plan and had not yet applied for a state mining licence.
A spokeswoman for the federal environment department confirmed on Thursday that Shenhua has not yet submitted the water management plan for assessment.
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