Global miner BHP Billiton announced on Friday that it had approved investment of 845 million U.S. dollars to sustain operations at Illawarra Coal in Australia's southern New South Wales by opening a new mining area at its Appin Mine.

Appin Area 9 will have a production capacity of 3.5 million tones a year of coal used for steel-making and will sustain its Illawarra Coal's production capacity at nine million tones a year, BHP Billiton said.

It will be operational in 2016, replacing production at its nearby West Cliff Mine.

"The investment sustains Illawarra Coal's production rates and recognizes the value of its high-quality metallurgical coal resources," BHP Billiton Metallurgical Coal President Hubie van Dalsen said in a statement.

"It is also good news for local jobs and the economy in the region."

According to BHP Billiton, the project includes roadway development, new ventilation infrastructure, new and reconfigured conveyors and other mine services.