TORONTO, June 17 (Reuters) - Canadian energy regulators said on Thursday a coal mine proposed by a unit of Australian billionaire Gina Rinehart's Hancock Prospecting Pty Ltd in the Rocky Mountains of Alberta is not in the public interest, dealing a blow to the project.
A joint provincial and federal review panel found the significant adverse environmental effects on water and wildlife likely to result from the Grassy Mountain steelmaking coal mine proposed by Hancock's Riversdale Resources Ltd unit outweighed economic gains.
The finding is a setback for Alberta Premier Jason Kenney's United Conservative Party government, although it is likely to be cheered by environmental groups, ranchers and other Albertans who fear coal mines would contaminate groundwater in the scenic foothills.
At its peak, the mine, to be situated near Crowsnest Pass, Alberta, would produce 4.5 million tonnes of steelmaking coal a year.
Canadian Environment Minister Jonathan Wilkinson will consider the panel's report before determining if the project is likely to cause significant adverse environmental effects when mitigation measures are taken into account, according to a statement. He is required to issue a final decision on the project by November.
Riversdale has said the C$800 million ($648 million) Grassy Mountain project would generate C$1.7 billion in taxes and royalties over the 23-year mine life, and employ 400 people.
($1 = 1.2343 Canadian dollars) (Reporting by Jeff Lewis; Editing by Peter Cooney)