Greymouth's rundown port is to get a $20 million redevelopment to handle coal shipments from the Pike River mine, in what Grey District Mayor Tony Kokshoorn says is part of an economic renaissance for the area.

Last week, Pike River Coal said it had agreed on a long-term transport contract for the shipment of up to 1.3 million tonnes a year of coking coal from stockpiles at its new mine north of Greymouth.

West Coast Coal, a consortium of Port Taranaki, TNL Group and shipping operators Wendell Group and Jebsens International, will truck the coal from the mine to Greymouth where it will be loaded on to purpose-built shallow-draught coastal vessels for shipment to the Port of Taranaki.

The plan calls for significant redevelopment of both ports.

Kokshoorn said the mine and associated port redevelopment was "the biggest thing around here for 100 years without a doubt".

The mine was expected to employ 110 workers, with "hundreds more" jobs created downstream.

That is especially welcome on the West Coast, which is only starting to recover from an economic slump of several decades.

Kokshoorn said that because of declining coal mining and logging activity the Coast's population fell from about 40,000 in the late sixties to about 30,000 a year ago.

"When Maui gas was discovered in Taranaki in the sixties that spelled the end of our coal industry here. But the fact that Maui gas is running out and that China and India are cranking up big time means coal's back in vogue. All of a sudden, it's not a dirty word any more, so we get a rebirth down here," said Kokshoorn.

The Pike River mine is the Coast's first big private sector coal mine for a long time. State-owned Solid Energy operates the Stockton mine near Westport. "The state now has a competitor and that's good, especially for labour prices," said Kokshoorn.

The new mine had arrived in the nick of time to save Greymouth's port.

"We were facing closing the port, it was run down to the point where it was totally shot. It had no income at all, just a small fishing fleet which was subsidised to keep it going. This is a godsend for us."

Kokshoorn said the Grey District Council planned to spend $20 million on redeveloping the port, including $7 million on replacing wharves. The same amount again would be spent on coal-handling and stockpiling infrastructure, including dust mitigation.

The council planned to form a partnership with West Coast Coal to run the redeveloped port and planned to finalise a deal next month.

Kokshoorn believed the redevelopment would open up Greymouth as a credible port and gave the district "an opportunity now to move forward confidently".

"It's just one more string in the bow for the West Coast, it's just firing up."

Production at Pike River is expected to begin in early 2007, with the first shipments taking place some months later.

It is expected to produce 250,000 tonnes of coking coal in its first year, eventually rising to 1.2 million tonnes a year.

The coal will be exported to steel-makers in Asia, India, South America and Europe.

Pike River Coal is 65 per cent owned by New Zealand Oil and Gas and 10.6 per cent by Indian coking company Saurashtra Fuels.

Shares in NZOG yesterday leapt 6c - or 7.4 per cent - to close at 87c.

Between them, NZOG and Saurashtra are putting up $40 million to develop the company. Pike River plans to raise a further $30 million in a share offer next March, which will make it the only listed coal company here.