Peabody will work with Yanzhou to ensure the mine's workforce is fully trained and equipped to begin longwall top coal caving (LTCC) operations in the first quarter of 2013. The equipment is expected to be placed into service in late 2012

LTCC technology improves the recoverability of coal over traditional longwall mining methods and will allow the operation to mine the full coal seam thickness of 6.5 metres versus the conventional longwall mining method of 4.2m.

Peabody Energy executive vice president and chief operating officer Eric Ford said: "Our agreement will lead to greater resource recovery, enhanced productivity and extended mine life. It also advances another avenue in our growing Chinese collaboration."

The North Goonyella mine will increase gas drainage techniques and implement improved dust abatement measures to underpin the success of the project.

Peabody has undertaken to train and up-skill its workforce over the next 12 months, with Yankuang Technology Development’s Australian subsidiary Yancoal Australia providing the LTCC technology and expertise.

Yancoal will also support Peabody Energy by providing experienced management and mining staff during extraction of North Goonyella’s longwalls 8, 9 and 10.

Peabody is the first company to sign a LTCC licensing agreement with Yanzhou, reflecting greater cooperation between the mining giants.

North Goonyella shipped 2.5 million tons (2.3Mt) of high quality hard coking coal to steel-producing customers in 2010.

Yankuang Group is the parent company of Yanzhou, which is among the largest coal producers in China.

The other major mine in Australia considering using LTCC techniques is Whitehaven’s Narrabri mine in New South Wales.

Whitehaven has already flagged that production could be doubled from 6Mt per annum run-of-mine to 12Mtpa under LTCC as an additional 300Mt of resource recovery is expected.

Investment bank UBS said LTCC could also reduce operating costs as only one continuous miner would be needed for development instead of three.

“This would also mean longer time periods between longwall moves, leading to potentially higher production rates,” UBS said.

The bank calculated that LTCC could provide a further 79c per share upside to Whitehaven on the basis that costs at Narrabri fall by $10 a tonne over the mine life compared to standard longwall mining.

Whitehaven ordered its Bucyrus longwall equipment on the basis it could be retrofitted to perform LTCC.