Australian government approval for preliminary mine expansion works in Tasmania has been ruled invalid by the Federal Court because impacts on a rare owl weren't properly considered.
Chinese-owned MMG wants to build a new tailings storage dam at Rosebery, something the company says is needed to ensure the mine can operate beyond 2024.
The Bob Brown Foundation brought legal action against the expansion in the takayna/Tarkine rainforest, arguing it would damage the habitat of the endangered Tasmanian masked owl.
Justice Mark Moshinsky on Monday ruled that approval from former Liberal environment minister Sussan Ley for geotechnical works at the site failed to properly consider threats posed to the owl.
"While the delegate ... identified a number of threats to the Tasmanian masked owl ... the delegate did not go on to discuss or make a finding as to whether those threats posed by the proposed action were serious or irreversible," he said.
"In the absence of any discussion or finding about this matter I infer that the delegate failed to consider it."
Justice Moshinsky said the minister did not consider the "precautionary principle" as required under the environment protection act and did not bring "active intellectual process" to the decision.
The Bob Brown Foundation said the federal court's decision was one of the most significant since the act's inception in 1999.
Former Greens leader Bob Brown reiterated his calls for recently appointed Environment Minister Tanya Plibersek to overturn approval for the project altogether.
"The nation's environmentalists will be counting on her to apply the law and protect this ancient rainforest and all of its threatened wildlife, trees and ecological communities," he said.
Justice Moshinsky is yet to make a substantive order but indicated he plans to set the minister's approval for the geotechnical works aside.
He called on legal parties to make submissions with some urgency.
"Otherwise works, I think, can continue until the decision is set aside. It is unsatisfactory for that to go on for too long," he said.
The Bob Brown Foundation says almost 100 people have been arrested during protests at the site of the proposed expansion.