"The Grootegeluk expansion represents one of the largest mining growth projects in Southern Africa," Exxaro's chief executive officer Sipho Nkosi said.
Limpopo premier Cassel Mathale said the expansion of the mine would be used to take the economy of the country further.
The mine already supplied the Matimba power station.
However, it would supply Eskom's Medupi power station with an average 14,6 million tonnes per annum of coal over the next 40 years.
The development also had positive spin-offs for the community, Nkosi claimed.
On Friday Exxaro also officially marked the completion of the first 270 housing units of 794 housing units planned in Lephalale for its employees.
- Sapa