The US has paid a $1bn fine to settle claims that the Chinese company that owns Australia’s largest coal mine failed to perform a basic safety assessment of the project and ignored the risks of the operation.

The agreement is the largest ever by the US in connection with its overseas coal project, which has become the subject of a public relations scandal involving a high-profile environmental activist.

The Chinese firm, Beijing-based Peabody Energy, will pay $750m in the settlement, according to a notice issued late on Tuesday by the Federal Court of Australia.

The firm has been accused of “reckless disregard” of its responsibilities under the Clean Air Act.

The company had faced a $2.7bn fine over pollution from its coal mine, but the court ruled that the penalty was too small.

“The court did not find the fine to be excessive,” the notice said.

The court was looking at a $750 million penalty.

The judge was asked to consider the fact that the mine, which is part of the Queensland-based company’s Carmichael coal mine in South Australia, has “significant and long-term” environmental risks, including the potential for “significant groundwater contamination”.

A spokeswoman for the court said the decision was “not a finding of fact” and that it would have no impact on the court’s decision.

The coal company said it was reviewing the decision.

“We are disappointed that the court found that the fine was not excessive,” it said in a statement.

“However, we will consider our options in light of this decision and the court has made clear that it is reviewing its findings.”

China’s state media said Peabotys findings were based on “false and speculative” claims.

“In fact, the company did not even test the site in order to determine if it complied with the requirements of the Clean Water Act,” it added.

The state-owned Chinese news outlet Global Times said Peacock Energy “did not perform a safety assessment on the coal mine before it opened” and “ignored the risks associated with the mine”.

The court said Peaco Energy had not been asked to undertake an independent environmental impact assessment on any of its projects.

It said the company was not required to undertake any such review.

The mine has been under scrutiny for months because of environmental concerns about pollution in the area and environmental activism.