BHP Billiton is squaring off against farming families in northwest New South Wales over some of Australias largest coal reserves.

The rural land south of Gunnedah contains an estimated 500 million tonnes of coal.

While the lands are rich in coal, they are also among the most productive agricultural lands in Australia and feature significant underground water reserves.

Farmers worry underground mining could disturb ancient aquifers, threatening livelihoods.

Tim Duddy is a fifth generation farmer whose 3000ha of freehold land lies within BHP’s 344sqkm exploration licence area.

“The major concern is that it has such extraordinary reserves of underground water and coal mines don’t exactly have the most environmentally sound record,” he said.

BHP wants to begin an 18-month drilling campaign involving 87 bore holes which would build on 46 bore holes drilled by the NSW Department of Mineral Resources.

“The exploration phase at Caroona is critical to collect data so BHP Billiton, the NSW Department of Mineral Resources and Department of Planning and the local community can work together to understand how a mine proposal could proceed without negative impact on agriculture,” the company said in a statement.

Stalling the exploration phase are farmers like Mr Duddy, who is meeting with company representatives today to discuss access to his land.

Mr Duddy and another farmer, Doug Rankin who owns 4000ha within the exploration licence area, have so far refused to allow access to their land.

They and other local farmers have also engaged legal counsel to draw up land access agreements as BHP begins a hearts-and-minds campaign to convince locals of the benefits of the exploration program.

“The project team wants to learn more about your area and the issues important to you to assist us in determining strategies that could reduce impacts and maximise benefits for the area,” BHP Billiton said in a newsletter circulated to local farmers.

“While we need to talk with everyone before we can understand the concerns, we are aware water and surface subsidence are high priority concerns,” the company said.

The Caroona licence was awarded to BHP earlier this year after its tender – along with a $100 million fee – was accepted by the NSW Government.

The licence was put up for tender after consistently high coal prices made the Caroona coal resources competitive.

The license area covers 350sqkm, including pastoral and freehold farming on the Liverpool Plains, acknowledged as the richest farmland in NSW.