Shenhua Watermark Coal said on Wednesday the New South Wales government in Australia agreed to buy out its exploration permit for the Watermark coal project for A$100 million ($77.17 million), reflecting changes in "economic and social circumstances" since the mine's start.

The Australian unit of China Shenhua Energy Co has tried to develop the A$1 billion thermal and semi-soft coking coal mine in the Hunter Valley north of Sydney since 2008.

But China's halt to Australian coal shipments and a deteriorating price outlook have eroded the mine's economics.

"While the project obtained state and federal government consents through rigorous merit-based approval processes, this decision reflects shifting economic and social circumstances since the project first commenced in 2008," Shenhua Watermark said in a statement.

Australia's coal exports have been hit by delays at Chinese ports and prices have fallen amid a growing row between the two countries, after Australia called for an inquiry into the origins of the novel coronavirus pandemic.

Farmers have also opposed the mine since it would be on prime agricultural land that could impact the region's water table and local Aboriginal people are against the development because it would disturb important cultural sites.

($1 = 1.2958 Australian dollars)

(Reporting by Rashmi Ashok in Bengaluru; Editing by Subhranshu Sahu) ((Rashmi.Ashok@thomsonreuters.com; +918061822604;))