Fish Lake, in B.C.'s central Interior, is part of a watershed system at the centre of the mining project proposal, which has now been turned down by Ottawa. (Council of Canadians)

The federal government has given the thumbs down to one mining project in B.C.'s central Interior while approving another similar project in the region.

Environment Minister Jim Prentice said cabinet has rejected the Taseko Mines Ltd. project because of its adverse environmental impact and the damage it would cause Fish Lake and dozens of connecting streams.

The mine was touted as an $800-million project that would create 700 jobs in the Williams Lake region, which has been hard-hit by the pine beetle epidemic and the economic downturn in the forest industry.

The federal and provincial governments conducted environmental reviews and each report said the project would have significant adverse effects.

The province approved the proposed mine in January despite the negative consequences on fish and fish habitat, saying the effects were justified in the circumstances.

A local native band also had strong objections to the mine project, with some members of the Tsilhqot'in Nation saying they would protect the land with firearms if necessary.

Prentice also announced cabinet approval of the Mount Milligan copper-gold project in central British Columbia.

The open-pit mine would be located about 155 kilometres northwest of Prince George, in an area the Nakazdli First Nation claims is its traditional territory.

Terrane Metals Corp., which will develop the mine, projects, said it will create about 400 jobs and process an estimated 60,000 tonnes of ore a day.

Future proposals possible

Prentice said Tuesday the Prosperity mine could not proceed "as proposed," which Randy Hawes, B.C.'s minister of state for mines, took to mean Prentice was leaving the door open for improved proposals.

"It seems to me with 17 years invested in this we could have come up with something a little better," Hawes said. "And I hope we will."

Williams Lake Mayor Kerry Cook said he also was disappointed, but remains committed to the mining project.

"We have already been in contact with mine proponent, Taseko Mines Ltd., and they have stated they are planning to get more information to evaluate options to move forward."

The David Suzuki Foundation applauded Tuesday's announcement. The mine would have destroyed Fish Lake and all the life in it, said foundation aquatic biologist John Werring.

"Mining companies must find a better way to do business — a way that does not destroy Canada's lakes and rivers," Werring said.

A Tsilhqot'in spokesman agreed the ruling was the right decision.

Chief applauds ruling

"The federal government has honoured its constitutional duty to protect First Nations rights and its responsibility to protect the environment," said Chief Joe Alphonse. "The government should be commended for recognizing that this project did not represent the best way to create jobs and economic growth."

B.C. New Democratic Party Leader Carole James said the approval of the one mine and rejection of the other demonstrated the benefits and flaws of the two projects.

"The Mount Milligan proposal had the broad support of the local community and local First Nations, and it included steps to mitigate the environmental impacts," James said. "The Prosperity project was a lightning rod for controversy, especially because it included a plan to drain Teztan Biny [Fish Lake], which has cultural significance for the Tsilhqot'in and has been fished for food for generations."

James called for the creation of a provincial mining commission.

"A mining commission would work with local communities, First Nations and mining interests to find where mining makes sense," she said.

With files from The Canadian Press