The expansion is now expected to cost around $A360 million compared with the previous estimate of $A290 million.

"This is due mainly to an increase in construction costs, in particular the price of steel and other materials used in the construction of the coal handling system and conveyor," Chaney said.

Despite the cost blowout, expansion remained on schedule with production of seven million tonnes expected by the 2006 financial year.

Curragh North is expected to produce around 4.7Mt this year.