NSW-based LD Operations, wants to mine coal in an agricultural area that is just 15 kilometres from the Margaret River town site.

Locals are opposed to the prospective underground mine, which is on a tenement once held by mining giant Rio Tinto.

They are concerned about possible groundwater contamination and a hit to the region's wine-making reputation.

Mr Barnett said that while the government was pro-mining, it did recognise the potential conflict of interest.

A spokeswoman said Mr Barnett would "give consideration to special legislation to protect Margaret River along the line of laws protecting the Swan Valley" near Perth.

LD Operations general manager Peter Ross said the project was in the early stages of the approvals process and it was still gathering information to ensure "an informed decision".

"Until all the details of the project are known, we believe it is too early for anyone to make a decision," he said.