A major mine expansion in NSW could threaten Sydney's drinking water, a court has been told.

Hearings have started in the state’s Land and Environment Court for a challenge to the approval of Centennial Coal's Springvale mine expansion, near Lithgow.

The expansion will extend the life of the mine by 13 years, but questions have been raised about the environmental cost.

The Environmental Defender's Office (EDO) is arguing that the water discharge from the mine will increase salinity in the Cox's River, which supplies Warragamba Dam.

EDO principal solicitor Sue Higginson said the Planning Assessment Commission (PAC) did not consider the discharge.

“There is an enormous amount of discharge every day, of mine water which is highly saline and contains heavy metals that will be discharged into the water catchment,” she said.

The challenge is expected to test a particular clause in the State Environmental Planning Policy requiring developments to have a “neutral or beneficial effect on the quality of water”.

“This mine will not have a neutral or beneficial impact on water quality,” Ms Higginson said.

A spokesperson for Centennial Coal said the project faced a “rigorous” and “exhaustive”, five-year long assessment process.

“The Planning Assessment Commission imposed rigorous performance measures for discharge water which were regarded as appropriate by both the EPA and Department of Planning”, the spokesperson said.

She said 300 jobs at the Springvale mine were put at risk by the legal action.

“After fighting to secure our Springvale approval, we will fight to retain it and protect the livelihoods of our local community,” she said.

The hearing is set to run for two days.