Centennial secured the contract over 12 years for its New South Wales Anvil Hill open-cut project, scheduled to commence production in 2008.

The thermal coal contract was made between Centennial Hunter and Macquarie Generation.

With domestic revenue now guaranteed, Centennial is now looking to overseas buyers who have indicated strong interest in Anvil Hill’s low-sulphur coal.

Centennial said it intended to seek approval for a substantially larger mining operation to maximise Anvil Hill’s export prospects. It said current mine planning provided the flexibility for the expansion.

The Anvil Hill project, near Muswellbrook, is expected to produce about nine million tonnes of thermal coal per annum once in production. Mine ramp-up is subject to successful completion of environmental studies, granting of all relevant statutory approvals and subsequent mine development.

Centennial said the Macquarie contract may be extended further under certain conditions. Pricing is based on a fixed price per gigajoule of energy, subject to an escalation formula.

Macquarie Generation is the largest of the three principal power generating companies in New South Wales and operates the Bayswater and Liddell power stations in the Hunter Valley.

Centennial has had a long relationship with Delta Electricity in western New South Wales as a coal supplier and, since acquiring the Powercoal mines from the NSW Government in 2002, has become a major supplier to Eraring Energy on the NSW central coast. The new contract is Centennial’s first long-term contract with Macquarie.

Yesterday’s deal brings Centennial's total domestic contracted coal to more than 150 million tonnes, with a weighted average contract life of 12 years.