MELBOURNE (REUTERS) - Australia's Great Barrier Reef watchdog gave the green light on Friday for millions of cubic metres of dredged mud to be dumped near the fragile reef to create the world's biggest coal port and possibly unlock US$28 billion (S$ 35 billion) in coal projects.

The dumping permit approval clears the way for a major expansion of the port of Abbot Point for Indian firms Adani Enterprises and GVK Power and Infrastructure and Australian billionaire miner Gina Rinehart.

Together they have US$16 billion worth of coal projects in the untapped, inland Galilee Basin.

"It's important to note the seafloor of the approved disposal area consists of sand, silt and clay and does not contain coral reefs or seagrass beds," the Great Barrier Reef Marine Park Authority said.

Environmentalists, scientists and tourist operators had fought the plan, which they fear will harm delicate corals and seagrasses and potentially double the ship traffic through the World Heritage marine park.