The seepage at Ulan follows recent bad news for Xstrata that its $880 million expansion plans for the mine will be challenged in the NSW Land and Environment Court by the Hunter Environment Lobby, which claims the conditions are not strict enough.

“We can confirm we have declared force majeure on certain customer vessels for the Ulan operation, following the interruption to production as a result of significant water underground following recent heavy rains,” Xstrata spokesman James Rickards reportedly told The Australian.

“We are managing the situation and pumping the water out from the underground area. We are unable to speculate at this time as to when production will resume.”

Ulan, which is 90%-owned by Xstrata, produces approximately 4 million tonnes of thermal coal a year.

Xstrata has been a major victim of the floods in Queensland, which forced it declare force majeure on coal contracts from its Queensland operations during the floods there over the past two months.

Asciano subsidiary Pacific National revealed last month that weather problems were affecting its NSW customers, including Xstrata.

“NSW coal haulage volumes are being impacted by coal chain congestion and the restricted availability of coal,” the company said.

“In particular, weather-related issues in the Gunnedah Basin and the Ulan network will likely reduce the average haul length anticipated in NSW during the fiscal year.”