A significant cultural heritage site has been damaged by coal mining beneath greater Sydney's water catchment, sparking an investigation by the New South Wales government.

First reported by Guardian Australia on Monday, a routine inspection at the Dendrobium coalmine near Cordeaux dam in March found fracturing and associated rock falls beneath an overhang that features culturally significant artworks.

On 25 July, the then mine owner South 32 invited WaterNSW and the registered Aboriginal bodies to inspect the site.

NSW authorities said the Traditional Owners were distressed by what they saw.

Subsidence, as soil and rocks sank into the void left by the mining, is blamed for the fracturing.

The Guardian reports a NSW environment planning department compliance unit will visit the site, near Sandy Creek Road, next week.

Former Illawarra Local Aboriginal Land Council former head, Paul Knight, said the harm caused by coal mining was just the latest adverse incident involving cultural and environmental sites on the Woronora plateau region north-west of Wollongong.

Mr Knight, a Traditional Owner of the area, said Dendrobium and other mines within the Illawarra Metallurgical Coal group were approved with a "performance measure" based on modelling that less than 10 per cent of such sites would be affected by subsidence.

He noted that one site might have hundreds of individual artworks or another a few items, making the 10 per cent level "random" and meaningless.

"The whole system is flawed in terms of accountability," he told The Guardian.

Mr Knight also said inspection teams may not visit every year and Traditional Owners had limited visiting rights, leaving it up to the mine owners to self-report in the event of damage to significant cultural or environmental sites.

Environmental consultancy Niche reported in 2023 that the area of Longwall 19, now being extracted, was home to Aboriginal sites "of high cultural significance".

Mr Knight said destruction or damage to one site potentially disturbed links to the landscape as a whole.

"Songlines are basically a journey, a path of a story,. Now if you damage one in the middle, that's like removing a whole section of pathway... you can never journey take that journey again because you've disconnected," he told The Guardian.

"It'd be like me taking the Mona Lisa and cutting it in half, and saying, 'Sorry about that'."

Greater Sydney's water catchment area's 364,000 hectares are designated as "special areas" with restricted public access. The restrictions have served to preserve Indigenous cultural sites; unless they are damaged by mining.

Coal mines are designated as state-significant developments with fewer environmental or heritage hurdles to clear to secure approval than other projects such as dams.

Gundungurra Traditional Owner Kazan Brown compared the damage to heritage sites by the mines under Woronora to Rio Tinto's destruction of Juukan Gorge in the Pilbara in May 2020.

"This is like another Juukan Gorge, and they are trying to cover it up in the same way," Ms Brown said.

"(The miners) should be taking responsibility for the damage they do to cultural heritage... They've been able to get away with it for too long."

A WaterNSW spokesperson told The Guardian the agency had written to the mine owners, registered Aboriginal parties, and other government bodies "expressing concerns about the extent of the damage caused and the potential for irreparable loss of this and other significant environmental (such as upland swamps and watercourses) and cultural values and landscapes".

The spokesperson said the agency had also "requested that all reasonable steps are taken to protect them".

A NSW's Department of Climate Change, Energy, the Environment and Water spokesperson said the report of damage to Aboriginal cultural sites "was very concerning and is being investigated".

A spokesperson for South 32, the mine owner at the time the site's damage was detected, said the company aimed "to develop natural resources responsibly and minimise our adverse impacts".

In late August, South 32 sold Illawarra Metallurgical Coal to GM3, an entity owned by the Singapore-based Golden Energy and Resources and M Resources.

The Illawarra Local Aboriginal Land Council is yet to publicly comment on the revelations, but the Council board is meeting this month and is likely to issue a statement thereafter.

The current NSW government vowed to reform the state's heritage laws before being elected 18 months ago.