The NSW planning department has warned of the impact that a new coal mine near Sydney would have on water supplies.

The Hume Coal project seeks to extract 3.5 million tonnes of coal a year over 19 years from a site near Berrima in the Southern Highlands.

The NSW Department of Planning and Environment says it received almost 13,000 submissions during consultations on the mine.

The department says that with all things considered, the mine and an associated $37 million rail project should be refused.

The department found the economic benefits of the mine would not outweigh its impacts on the environment and community.

“The department considers there is currently considerable scientific uncertainty about the level of environmental damage to both groundwater and surface water resources,” it said in a statement.

“The predicted drawdown impacts on the groundwater aquifer would be the most significant for any mining project that has ever been assessed in NSW.”

Hume Coal said through a spokesperson that it was disappointing to be rejected, but pointed out that the ultimate decision will be made by the Independent Planning Commission.

Leading water scientist Dr Ian Wright said the department's rejection should send a clear message about mining in Sydney's drinking water catchment.

“We can't make any more drinking catchments — we're so lucky to have them — but once you put a mine in, every single one I study causes pollution for ever and ever,” Dr Wright told the ABC.

“So this is just going to avoid yet another major pollution source that possibly we'll pass onto our grandchildren.”