Xstrata said the death followed an incident involving the release of reject coal from a bin.
The company added that local emergency services are currently at the site and an investigation is underway, with the exact cause of death yet to be determined.
As a consequence of the fatality, operations at the longwall mine have been shut down.
According to the Sydney Morning Herald, police said the contractor was a 59-year-old Singleton man who died after driving his truck and trailer into a coal loader at the mine just after 2am.
NSW Department of Primary Industries spokesman Tom Braz told International Longwall News the department was still gathering details and would make a release later in the day.
Xstrata spokesperson James Rickards told ILN the incident was the first fatality in Xstrata Coal’s Australian operational history.
Xstrata acquired the longwall mine last year.