TORONTO (miningweekly.com) - US coal-producer Peabody Energy will go ahead with a project to upgrade and expand capacity at its Metropolitan mine, in New South Wales, Australia, by one-million tons.

The expansion will cost about $70-million, including about $15-million this year, the company said on Thursday.

The Metropolitan mine received the final permits for the project in the second half of 2009.

Last year, the underground miner shipped 1,5-million tons of mostly hard coking coal for export to Asian steelmakers.

Peabody, which has mines in the US and Australia, has said it plans to boost output of coal in Australia to take advantage of surging Asian demand.

"The Metropolitan mine expansion is one of a number of projects aimed at nearly doubling Peabody's Australian met coal and thermal export platform by 2014," CEO Gregory Boyce said in a statement.

"China, India and other Asia-Pacific Rim nations are significantly short of quality metallurgical coal.

"Such coal is in limited supply, but remains a vital ingredient for a steel industry that is recovering in developed markets and expanding in emerging nations."

Peabody aims to increase metallurgical coal shipments from Australia to between 12-million and 15-million tons a year by 2014.

This year, the company aims to boost thermal and metallurgical coal shipments by 20% to 30%.

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