A controversial mineral sands mine proposed for eastern Victoria has been rejected by the state planning minister because it poses a risk to the environment and nearby agriculture. 

The 16.75-square-kilometre mine footprint was planned for an area near the Mitchell River, 275 kilometres from Melbourne, next to one of Victoria's most prosperous foodbowls. 

Planning Minister RIchard Wynne said the "pose a significant risk to the environment and valuable horticulture industry".

"We owe it to the community and the environment to get this right and ensure only projects that adequately protect our environment go ahead," he said.

Decision may be appealed

The mine's proponent, Kalbar Operations, has not ruled out appealing the decision. 

CEO Jozsef Patarica said he disagreed with the findings of the the independent advisory committee. 

"[The project] would operate in harmony with the local people, natural environment, farming, water resources, and other industries," he said. 

"Kalbar is committed to the development of the project in a way which is consistent with the best interests of the community and will undertake a thorough review of the determination before confirming the next steps for this Project," he said. 

Community rejoices

For more than seven years, community group Mine Free Glenaladale has been organising protests, analysing the project's environmental effects statements, and lobbying governments against the project. 

Their spokesperson Debbie Carruthers said the community was elated. 

"I'm sure we'll be getting together having huge hugs and cries," she said. 

"We felt all along it's been a David and Goliath battle, but our arguments in relation to the environmental effects were so strong, that it had to stop," Ms Carruthers said. 

Businesses saved

Vegetable grower Kane Busch lauded the decision to reject the mine, which would have been two kilometres from his property. 

"People have built businesses and livelihoods in this area for many years based on the pristine environment," Mr Busch said. 

"We all had a big part to play in it, no matter how little impact people think they have, it's all contributed to this great outcome today," he said.