The world's biggest thoroughbred breeders may be forced to abandon their operations in the NSW Hunter Valley if the state government approves an open-cut mine.

The Department of Plannings this week rejected the recommendations of the NSW government's independent planning assessment commission that the Anglo American Drayton South mine should not go ahead.

Irish-owned Coolmore and Dubai ruler Sheikh Mohammed's Darley Studs are close to the site and may be forced to move out of the state.

"It would be an untenable situation for us to continue the operations we run in the Hunter Valley knowing the mine was going ahead," Darley Australia managing director Henry Plumptre told Sky Sports Radio.

"We would have to consider relocation either interstate or off shore."

"The government should be on notice that we will absolutely fight them tooth and nail and we have shown over the last five years we are not to be scoffed at.

"We have unequivocal findings that say thoroughbred breeding and mining are totally incompatible."

The Hunter Valley Thoroughbred Breeders said in a statement it was shocked by the backflip over the mine.

"Since the implementation of the Strategic Regional Land Use Policy the NSW government has stated their new policies and processes are designed to protect significant agricultural lands, water and industries," HTBA president Dr Cameron Collins said.

"The recommendations of the independent Planning Assessment Commission were that this mine should not to go ahead and that the studs should be afforded the highest level of protection from mining," he said.

"It is extraordinary that the Planning Department should reject the findings of the government's independent Planning Assessment Commission and the Gateway Panel.

"It shows a breathtaking lack of understanding of our industry and our business model and an obscure interpretation of the PACs recommendation.

"It also displays a total disregard for the health and safety of the families that live on our stud farms less than 500 metres from this proposed open cut coal mine.

"It is incomprehensible that a government department can, with the stroke of a pen, dismiss the advice of two independent bodies appointed by the government and signal the death knell of an entire industry in the Hunter Valley, billions of dollars of investment and thousands of jobs for the sake of one mine."