The Mt Arthur expansion has received NSW Department of Planning approval allowing for a total of 28Mtpa of run-of-mine coal production from the combined mine complex.

The open cut expansion, known as the MAC20 project, will produce 20Mtpa of ROM coal a year while the upcoming underground mine, which was government approved in December last year, is targeting 8Mtpa ROM coal production.

BHP expects MAC20 to start up in the first six months of 2011 at an estimated capex of $US260 million, with the truck and shovel operation estimated to extract coal at least until 2022.

“The MAC20 project approval demonstrates BHP Billiton’s commitment to expanding its thermal coal business in the region. This is a great next step in the mine’s development,” BHP Billiton energy coal president Dave Murray said.

“Mt Arthur Coal currently employs approximately 670 staff and today’s announcement will see an increase of a further approximately 190 employees, many of whom we expect will come from the surrounding towns.”

Meanwhile, as a 35% stakeholder of the Newcastle Coal Infrastructure Group, BHP has chipped in $US390 million towards the building of a new $A1.3 billion terminal at Newcastle’s port.

“The new NCIG coal-loading facilities will be utilised for the additional product resulting from the [MAC20] project,” Murray said.

The terminal is targeting export capacity of 30Mtpa and is more than 63% complete, with the first coal shipment expected by around the end of March 2010.

The Mt Arthur underground project has already received state government approval for a mine life of 21 years, but the project still awaits internal BHP company approval.

The proposed 6-8Mtpa operation has been previously expected to produce its first longwall coal in late 2010-early 2011, before the impacts of the global financial crisis.

Shares in BHP closed up 41c to $37.51 on Friday.