The Chilean government has rejected plans for a billion-dollar mining project because it would disrupt sea life, including endangered penguins.
A Chilean company, Andes Iron, had wanted to extract millions of tonnes of iron in the northern Coquimbo region as well as building a new port.
Ministers said the project did not provide sufficient environmental guarantees.
Coquimbo is close to the islands which form Chile's Humboldt Penguin Reserve.
The area is home to 80% of the world's Humboldt penguins as well as other endangered species, including blue whales, fin whales and sea otters.
Environment Minister Marcelo Mena said: "I firmly believe in development, but it cannot be at the cost of our environmental heritage or cause risk to health, or to unique ecological areas in the world."
Mr Mena said the decision of the ministerial committee had been based on technical aspects and the evidence of fourteen agencies and was taken without "political considerations."
Chile's National Mining Society (Sonami) was quoted by the Spanish news agency, Efe, as saying "this decision was bad news for mining and for the country".
Andres Iron can file an appeal in the case.
Correspondents say mining companies have in recent years had a harder time obtaining permits in Chile because of growing interest in the environment from politicians and public opinion.