The mining sector says New Zealand has effectively shut the book on seabed mining and will miss out on significant royalties.
On Wednesday the Environmental Protection Authority rejected a proposal to mine the seabed off Christchurch. Last year it also turned down a separate seabed project off the Taranaki Coast.
Chatham Rock had wanted to mine phosphate off the coast of Christchurch saying it was worth $156 million dollars a year.
But the Environmental Protection Authority said that mining would cause significant adverse effects on the seabed, and could not be mitigated under any reasonable conditions. It also said the economic benefits were modest at best.
Chatham Rock's managing director Chris Castle said this looks like the beginning of a trend and sends a strong message to overseas investors.
"We are disappointed and I think more worried about the wider impact of this both in international marine mining and also for investor perception overseas as to how easy it is to do things in New Zealand."
An application by Trans-Tasman Resources to carry out an iron ore mining project off the coast of Patea in Taranaki was rejected last June.
In that case the Environmental Protection Authority said it was not satisfied the environment would be safeguarded or that the adverse effects could be avoided, remedied or mitigated.
Straterra represents minerals producers in New Zealand. Chief executive Chris Baker said yesterday's decision sends a clear signal to investors.
"The repercussions are that potential investors will be looking elsewhere. That's pretty black and white."
He said the Exclusive Economic Zone Act, which is what these projects fall under, isn't fair on the mining sector
"Elements of the Act itself need to be changed to enable a project, like a mining project, that inherently has uncertainty, to be dealt with in a responsible way. I'm not talking about lowering standards, I'm talking about the conditions that would be applied and required of an application so that the environmental impact would be manageable."
But Forest and Bird's Kevin Hackwell said that's rubbish. He said Trans-Tasman Resources might have got a permit if it had submitted a more thorough application.
And he said the company has said it's not giving up on its project.
Energy Minister Simon Bridges said he understands why the company is disappointed.
"I can certainly understand what Chris Castle is saying from an economic development perspective. Ultimately the EPA is an independent body."
The EPA was asked whether the decision signaled the door closing on any seabed mining projects.
It said each application is looked at with fresh eyes.
Despite yesterday's setback, Chatham Rock said it has no plans on giving up its intention to mine phosphate.
The company has 15 days to appeal. It says it is considering that option, or whether to submit a new proposal.
That could be hard sell for shareholders though. The company's share price fell more than 90 per cent yesterday shedding $40 million from the books.