The recommendation to approve the Dendrobium mine expansion has angered people concerned about its impact on scores of Aboriginal heritage sites, many set to be directly undermined.
The Department of Planning, Industry and Environment (DPIE) found there would only be "limited" damage to cultural sites, which included "23 axe grinding groove sites, 34 sandstone shelters with art and/or archaeological deposits and one artefact".
But it said nine of the 10 rock shelters which were at risk of more than 100mm of subsidence had "low scientific significance".
The Illawarra Local Aboriginal Land Council's submission, objecting to the project, said this "scientific" assessment was "offensive".
"As an Aboriginal community we find that the process of assessment of our sites and their value being reflected in relation to their scientific classification as being completely inappropriate and offensive," it said.
"This position fails the human test. Aboriginal people are not scientific experiments. Our heritage belongs to us."
DPIE said it had recommended changes to the project to protect Aboriginal sites. One of these sites had been "substantially protected" by the miner's revision of its project to reduce the spread of one longwall panel.
"The five remaining sites are all located centrally above longwall panels," DPIE's assessment report said.
"Given the limited risks of impacts, the department does not consider that the scientific or cultural benefit of avoiding the risk of impacts is warranted."
Dr Rada Germonos of Protect Our Water Alliance said six of the "invaluable" sites were sandstone shelters with rock art, likely thousands of years old.