BHP Billiton has committed $832 million to establish a new mining area at Illawarra Coal's Applin Mine.
In a statement today BHP said the new project, named Appin Area 9, will start in 2016 and produce 3.5 million tonnes per year of metallurgical coal.
The company said construction of the new mining area would include work on new roadways, ventilation infrastructure, reconfigured conveyors and other services.
The development will replace production at the West Cliff mine, and BHP said it had received "all necessary regulatory approvals".
With Appin Area 9 BHP will be able to maintain Illawarra Coal production at nine million tonnes a year, and in a statement BHP metallurgical coal president Hubie van Dalsen said the announcement was good news for the region.
"The investment sustains Illawarra Coal's production rates and recognises the value of its high quality metallurgical coal resources," he said.
"It is also good news for local jobs and the economy in the region."
Earlier this year BHP said it was looking to delay some massive expansions, like the $20 billion Outer Harbour Development at Port Hedland, and progress at slower rate.