Peabody Energy says it has started shipping coal from its new El Segundo mine in northwestern New Mexico.
The mine will supply coal by rail to two Arizona power plants under long-term contracts.
St. Louis-based Peabody says it spent about $70 million developing the new mine, which is adjacent to the company's Lee Ranch mine near Grants. The mine will employ about 265 workers.
Peabody spokeswoman Beth Sutton says utility Arizona Public Service Co. will take as much as 4 million tons a year of coal for 19 years for its Cholla Generating Station in eastern Arizona.
Tucson Electric Power Co. will take 3 million tons a year for 20 years for its Springerville Generating Station, also in eastern Arizona.