The Dominican Republic government has rejected a request by Glencore Xstrata to explore nickel in a mountainous area of the country.
The Loma Miranda project would have a negative impact on communities living there, the authorities said.
The area, in central Vega province, is mostly covered by tropical forest.
The Dominican Republic shares the Caribbean island of Hispaniola with Haiti, where great part of the original rainforest has been cut down.
The Canadian mining company Falconbridge had operated in the country for some years, before being bought up by Xstrata in 2006, which has now merged with Glencore to become Glencore Xstrata.
Environmental Minister Bautista Rojas Gomez said he had accepted advice from United Nations Development Programme (UNDP), which opposed the project and published a critical report two weeks ago.
The project "does not attend the country's social and environmental demands," said the UNDP in the report, which was presented to the Dominican authorities.
Residents feared that their water supplies would be contaminated and that their way of life, in a remote part of the island, would be compromised.