The residents of a small New South Wales town will be celebrating victory against a mining giant today, after the Supreme Court ruled against Rio Tinto’s Warkworth mine expansion.

Rio Tinto's bid to expand the Mount Thorley Warkworth open cut coal mine near the Hunter Valley town of Bulga has been rejected.

The Supreme Court has upheld a Land Court finding that the expansion would do more harm than good.

NSW Planning Minister Brad Hazzard teamed-up with Rio Tinto to file a joint appeal last year, after the development approval was first overturned.

Lawyers tried to argue that there were legal issues in the original decision to revoke Hazzard’s approval for the expansion.

The appeal has now been dismissed, meaning the State Government and Rio Tinto will join forces once more - to pay legal costs.

Rio has warned it will likely lodge another development application under new planning policies, which are in fact the result of last year's court ruling.

The court’s call ends the latest round of a David and Goliath battle between the Bulga Milbrodale Progress Association and Rio Tinto.

Bulga local and association spokesperson John Krey said the same plan just keeps getting lodged.

“It is exactly the same application as they put in four years ago and both courts - that's the Land and Environment Court and the Supreme Court - have both said no,” he told the ABC.

“So we are saying to the Department of Planning and Rio Tinto; bugger off.”

Mr Hazzard has reportedly said that any future formal development application from Rio will be re-assessed on its merits.