Rio Tinto to submit new Australia coal mine plan after losing legal fight

* Rio Tinto (Xetra: 855018 - news) loses Australian court appeal to extend coal mine

* To submit a revised plan to keep its Warkworth mine viable

* Opponents vow to fight any new proposal

* Set back for Rio Tinto as coal markets weaken (Adds Rio Tinto quotes, lost production)

SYDNEY, April 7 (Reuters) - Rio Tinto has lost a legal fight to expand its Warkworth coal mine in Australia, which the global miner said was necessary to maintain viability as coal markets weaken.

Australia's Supreme Court on Monday dismissed an appeal by Rio Tinto to overturn an earlier ruling that found projected economic benefits of extending the mine in the small community of Bulga 180 km ( 110 miles) north of Sydney failed to outweigh its environmental impact.

Coal is Australia's second-biggest export earner after iron ore but the country faces tough competition from other suppliers. Neighbouring Indonesia now mines around 400 million tonnes of coal annually compared with 420 million in Australia.

Chris Salisbury, managing director of Rio Tinto's Coal & Allied unit, said the legal battle spearheaded by environmental legal group EDO had led to a projected 1 million tonnes in lost production for 2014, with losses next year not yet determined as the company prepares to restart from scratch the approval process to spread mining over additional land.

Salisbury said Rio Tinto would submit revised development plans for the mine in the coal-rich Hunter Valley district of New South Wales state, where global mining companies including Glencore Xstrata (Other OTC: GLCNF - news) , Peabody Energy (NYSE: BTU - news) and BHP Billiton also have operations.

In its revised plans, Rio Tinto is offering to set aside more than 1,800 hectares of land for a National Park and fund A$9 million ($8.37 million) woodland and employment programmes.

"We are pushing forward with a significantly enhanced mining plan," Salisbury said following the judgment.

"Time is of the essence" to improve the mine's economy of scale given the weak market gripping the coal sector, he said.

Coal sells for half what it did in 2011 and prices are down almost 70 percent from all-time highs in 2008. Analysts forecast prices will continue to drop as growth in use for steelmaking wanes and more electricity is generated from shale gas.

ENVIRONMENTAL OPPOSITION

Salisbury said, as it stood now, the Warkworth mine could only maintain existing production and employment levels until the end of 2015, putting 1,300 jobs at risk.

"It is essential we secure longer term approvals before then to ensure the mine remains economically viable," he said.

The mine is part of the integrated Mount Thorley Warkworth colliery. The operation supplies up to 10 million tonnes of mostly thermal coal a year, according to Rio Tinto's website.

Environmental groups vowed to oppose any new plans.

"We don't think that Rio Tinto's new submission is any different from the old one and we will fight it," said John Lamb, president of the Bulga Milbrodale Progress Association.

The association argued it would create noise and dust problems for nearby residents.

Fellow Australian miner Whitehaven Coal Ltd in December won a court fight against environmentalists seeking to overturn the Australian government's approval of its A$767 million ($708.06 million) Maules Creek mine.

A court dismissed a challenge from a group concerned the mine would destroy forests and spread coal dust on farms.

BHP Billiton (NYSE: BBL - news) coal president Dean Dalla Valle last week said new investment in mines in recent years and greater productivity meant competition will be fierce at a global level. ($1 = 1.0759 Australian Dollars) (Additional reporting by Jane Wardell; Editing by Ed Davies)