Solid Energy is starting a small-scale mining operation at its Ohai opencast mine in Western Southland after finding a new coal seam.
The state-owned firm says it intends to extract about 50,000 tonnes of coal which it plans to sell in the South Island by August.
The company says the operation will create up to eight new jobs.
In its heyday, the Ohai mine pits employed about 300 people but the site was wound down and finally closed two years ago.
Solid Energy's Southland mine manager, Antony Stodart, says the coal seam was found while landscaping the old site.
Mr Stodart says the company is reasonably confident it will find even more recoverable coal in the seam than it is certain of at present, and will know for sure for about three months.
A coal resurgence is underway in Western Southland with a significant mine expansion being developed by Bathurst Resources in Nightcaps and a new mine planned by L&M Group in between Nightcaps and Ohai.