Federal Environment Minister Tony Burke has rejected a bid by conservationists to lock out mining from Tasmania's Tarkine region.
Mr Burke has rejected the Australian Heritage Council's advice to list more than 400,000 hectares of the Tarkine on the National Heritage Register.
The decision has shocked the Greens, who are predicting another long-running environmental fight in Tasmania.
Mr Burke says it would have been "disastrous" for potential mining jobs in the area if he had followed the council's advice.
"From purely environmental terms, it would have been something that would have been a wonderful thing to be able to do but you have to take into account the impact on people and taking that impact into account meant that I simply couldn't go with the Heritage Council's recommendations," he said.
"To do heritage listing you have to truly represent the values and, politically, there may well have been an option of my putting a bigger area on the heritage list and claiming 'there you go, I've done it', but it would have been an abuse of the system."
Mr Burke made the announcement in Tasmania's north-west this morning.
A two-kilometre wide stretch of coast taking in 21,000 hectares has been placed on the list, due to Indigenous heritage values.
Environmentalists had wanted heritage protection for 433,000 hectares of the state's north-west.
Mr Burke has already approved a magnetite mine, but has applied conditions aimed at protecting Tasmanian devils and quolls from being killed by traffic on new roads through the area.
Tasmania's Premier Lara Giddings says the decision allows for the creation of more than 1,000 jobs in the north-west.
"What this means is that any arguments that Tasmania is closed for business are now dead in the water," she said.
"This is a great day for Tasmania, a great day for jobs."
Wayne Bould from Grange Resources, which owns the Savage River open-cut magnetite mine, says miners now have more certainty.
"It's good news for everybody, and it encourages my board to invest in some of the longer term opportunities we've got," he said.
Mr Bould says international investors have been waiting for certainty on whether development in the north-west region would be restricted.
Venture Minerals and Shree Minerals both have plans for mines in the Tarkine.
But Tasmanian Greens Senator Peter Whish-Wilson says it is a devastating decision.
He says the Greens were expecting a compromise decision and the fact that the Tarkine is now available for mining will come as a shock.
He believes the move will inspire a new wave of environmental activism.
"I think it's going to wake a lot of people up from their slumber and, unfortunately, I think this is going to lock in long-term conflict in Tasmania which is the last thing we need," he said.
"This is another big win for the miners and another big loss for Australians.
"They should know better in this day and age.
"We only get one chance to protect the environment."
Greens leader Christine Milne describes it as a "crime against the environment".
"What possible justification can an environment minister have for abandoning the environment to the mining industry? If anyone had any doubt as to who is running the environment portfolio in the country, they need look no further than the mining industry and their spokesperson Paul Howes," she said.
While the decision has infuriated the Greens, it is likely to be seen by Labor sources as helpful for the party in the marginal federal seat of Braddon.
Unions have campaigned to allow mining.
Australian Workers Union head Paul Howes says the campaign to put the Tarkine region on the heritage register was run by mainland activists and would have been a disaster for Tasmania.
"What the Federal Government has done today is a huge win for the people of Tasmania and also for the future of the economic development of north-west Tasmania, which sorely needs more jobs and more mines," he said.
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