Peabody also reached a 10-year agreement with the Australian Rail Track Corporation for below-rail track access in the Hunter Valley rail network, beginning in January 2012, as it beds down its export infrastructure in NSW.

The contract covers expansion volumes from the Wilpinjong and Wambo mines in line with contracts and allocations in place with export terminals at the Port of Newcastle.

"The successful expansions of Wilpinjong and Millennium increase our annual thermal and metallurgical coal supplies to serve the highest demand regions by a combined 3 to 5 million tons," said Peabody Energy chairman and chief executive officer Gregory Boyce.

"With the recent acquisition of Macarthur Coal and additional Australian mine expansions over the next several years, Peabody plans on a rising share of our earnings to come from the world's largest coal exporting nation."

The Wilpinjong thermal coal mine in NSW will increase annual production by 2-3Mt beginning in 2012 from the 9.2Mt in 2010 after completing a preparation plant and coal handling facility expansion.

The mine supplies export and domestic markets and is among Australia's most productive surface operations.

Capital investment for the project is expected to total approximately $95 million.

The Millennium mine is targeted to increase pulverised coal injection coal and semi-hard coal production by 1-2Mt per year when full production is reached in 2013.

Peabody has invested approximately $20 million of the expansion capital to date, with the majority of the investment of up to $275 million to be made over the next two years.

Millennium sold 1.6Mt in 2010.