The Kentucky operator has submitted an application to permit a portion of its excess mining property for the space.

"By having this extra space for rock disposal, the company can have the freedom to ship cleaner coal without hauling the excess refuse,” Quest president Eugene Chiaramonte said.

“This saves on shipping costs and boosts the recovery percentage; hence, producing more efficient profits with less cost."

The producer said last week that it intended to emerge “a stronger Quest” after a reorganisation of its Gwenco Resources subsidiary following a Chapter 11 filing.

The company said the Eastern District of Kentucky for the US Bankruptcy Court approved the third amended Plan of Reorganization earlier this month.

“In reaching our confirmation, we have accomplished a major goal of restructuring our company and creating a stronger Quest," Chiaramonte said at the time.

"As we emerge, the recapitalization of Gwenco will be complete.”

Quest said in mid-August it was starting to see rebounding coal demand after Gwenco successfully secured a contract with a large coal production and distribution company.

While it did not release the customer’s identity, Quest said at the time that coal orders would be placed “for the foreseeable future” under the deal.

Quest began renovation work on the Cedar Grove and Pond Creek operations in 2008, and has retained Whitestar as the contract miner for its operations.