Major regeneration plans for the former Daw Mill colliery in Warwickshire have been dealt another blow after Network Rail withdrew its interest in the site.
Developer Harworth Estates is hoping to turn the site into a rail hub but the Government's transport body said it was no longer eyeing the site near Arley for a railway sleeper factory and was looking for alternative sites.
Daw Mill was the victim of a devastating fire in February 2013 and its owner UK Coal announced plans a few weeks later to shut the colliery, costing around 650 jobs.
Rotherham-based Harworth Estates wants to build more than 260,000 sq ft of commercial space on the site which would create around 685 jobs.
Its latest planning application was thrown out by North Warwickshire Borough Council last month as the authority said the developer had not demonstrated that "very special circumstances" existed which would permit building on the green belt.
Harworth Estates announced the next day it would appeal the rejection but this latest decision from Network Rail throws the project into further doubt.
The company remains defiant, saying its position had not changed in the wake of this development.
"Clearly, it's disappointing that Network Rail have withdrawn their interest in Daw Mill but this was inevitable given the planning committee's decision," Harworth Estates said.
"This does not change our intention to appeal as Network Rail's interest was not part of our outline planning application.
"Our central argument - that the site's industrial assets, including its railhead, should be re-used to support new employment uses - remains exactly the same.
"We still strongly believe the most appropriate long-term use for Daw Mill is as an employment site for rail-related occupiers."
Network Rail's announcement was however welcomed by some, including Craig Tracey, Conservative MP for North Warwickshire and Bedworth.
He said: "This is very good news, residents have been clear they did not want the factory or business park on the old site.
"It is well known the covenant on the site stated that, once the coal mine has ceased, the site would go back into greenbelt land.
"As a long-standing opponent of the Harworth Estates plans, which would have had a major impact on local roads and villages, I was delighted the Conservative council listened to local residents and rejected the application."
Covering around 108 acres, Daw Mill colliery opened in 1956 and was once the UK's largest working coal mine and also one of the biggest in Europe.
Harworth Estates has revised its plans twice since they were initially submitted, including reducing the employment space by half.
The latest version rejected in November was seeking outline permission to build up to 265,345 sq ft of industrial space and a depot to maintain rail infrastructure such as the stabling of trains and storage and handling and processing of railway-related materials.
The application site covers 76 acres of the colliery.