Taxpayers will be footing a $57 million bill in the sale of Solid Energy's Stockton coal mine to remedy environmental impacts.
Another two mines will be included in the $46 million sale, which waives buyer Bathurst and Talleys Mining from paying for any environmental clean-up.
Official documents show Cabinet agreed to take on responsibility for the clean-up to improve the likelihood of the West Coast mine being sold.
Forest and Bird chief executive Kevin Hague says buyer BT Mining should be paying for it.
"In this case, BT are getting to buy the assets at a bargain-basement price. The taxpayers are footing the bill for all the environmental damage.
"It's hard to imagine anything else that Government could do that would make this more favourable for Bathhurst and Talley's. I guess they could just give it away for free, which is more or less what they've done," he told Newshub.
Mr Hague said much of the damage caused by coal mining can never be repaired.
Solid Energy's mines were valued at more than $150 million in 2015. They are being sold for $46 million.