Meanwhile union and environmental leaders are asking that the proceeds of the sale of the corruptly gained leases be returned and that individuals found to be corrupt by the Independent Commission Against Corruption be barred from holding leases in the future.

Shares in NuCoal plunged 53% yesterday on the news that it would be stripped of its major asset.

NuCoal chairman Gordon Galt said NuCoal would take whatever action was necessary to protect its interests and that of its shareholders, including “by way of a constitutional challenge to the legislation once introduced”

“As a result of this decision, the reputation of NSW is further damaged and significant questions of sovereign risk in regards to investment in the resources industry under this Government have been further confirmed,” he said.

“NuCoal is nothing but an innocent party in this matter as was admitted by the Premier [Barry O’Farrell] prior to the commencement of the ICAC inquiry. The decision has not drawn a line under the matter given that to date there has been no prosecution of any of the persons actually named as being corrupt by the ICAC. Ironically it appears that there will be no special legislation enacted to deal with them.

“The government has focused on the easy target and the destruction of a demonstrably innocent company and its 3400 shareholders.”

NuCoal had argued that it had spent more than $40 million on exploring and proving up the resource and its shareholders were an innocent party to a transaction between former Resources and Energy minister Ian Macdonald and his union “mate” John Maitland.

The fact that no compensation is to be payable under the proposed legislation is grossly unfair, with even the ICAC itself suggesting that the government consider paying compensation if it intended to legislate to cancel the EL, Galt said.

“It is unacceptable that a government considers that it has the right to take – with no compensation – the results of all the detailed exploration results NuCoal paid for and the many upfront payments NuCoal made – when it was the government of NSW itself that insisted that we spend these funds in accordance with the conditions of the EL.

“When the government reallocates the EL area it clearly intends to take and keep payments it receives for this information.”

Premier O’Farrell made the shock announcement late on Monday that the licenses for Doyles Creek as well as Cascade Coal’s Mt Penny and Glendon Brook leases should be revoked.

He is now under pressure to confiscate the $30 million paid to former Labor party minister Eddie Obeid by directors of Cascade Coal for agreeing to sell the Mt Penny leases as part of a $60 million deal designed to disguise his part in its corrupt approval by Macdonald.

Construction Forestry Mining Energy Union national president Tony Maher said corrupt individuals should face sanctions preventing their access to mining licenses.

“The ICAC’s findings on these matters were clear – a number of businessmen and government officials acted corruptly to get their hands on the very large sums of money the mining industry generates,” he said.

“Mr O’Farrell’s move to cancel these licenses is a strong and welcome measure – but he should go further and make sure these grubs never do business in NSW’s coal industry again.

“The mining industry is too important to risk the taint of corruption. The industry must be impeccably regulated and deliver returns to communities and taxpayers.

“The industry itself should fight for these licenses to be cancelled, to avoid losing public confidence.

“Those individuals found by the ICAC to have acted corruptly should be sent to the sin bin.”

The CFMEU consistently rejected lobbying to back the Doyles Creek training mine, Maher said.

“This was never anything more than a get-rich-quick scheme cynically dressed up as a training initiative and we refused to have a bar of it,” he said.