The Queensland Resources Council (QRC) says the approval of a $4.2 billion coal project in the state's central region shows the sector has a long-term future.

BHP Billiton yesterday approved the development of its open-cut Caval Ridge Mine near Moranbah, north-west of Rockhampton, which is expected to produce more than 5 million tonnes of coal from 2014.

The company has also approved an expansion of the adjacent Peak Downs Mine, which is set to generate an extra 2.5 million tonnes.

BHP Billiton and its partner Mitsubishi will spend $4.2 billion to build the new Caval Ridge Mine and expand the Peak Downs Mine, both located in the Bowen Basin.

The company says the resource life of the project is expected to be more than 60 years, with the first coal produced in 2014.

BHP says the project includes the construction of a new coal handling and preparation plant at Caval Ridge to process coal produced at both mines.

The company plans to send the coal by rail to the Hay Point terminal near Mackay in the state's north for export.

QRC spokesman Michael Roche says he is expecting more major coal investments in Queensland, despite the carbon tax.

"This is further evidence that coal remains very much the backbone of the Queensland resources sector, joined recently by the burgeoning gas sector but any reports of the demise of the coal industry are very premature," he said.

"We're expecting many more major investment decisions out of the coal sector.

"Some projects will be killed off by the carbon tax but there are plenty of projects in the pipeline to ensure a very strong growth future for the Queensland coal industry."

However, Isaac Mayor Cedric Marshall says the 100 per cent fly-in, fly-out workforce at Caval Ridge will not provide direct benefits to surrounding towns.

Mr Marshall says he hopes local businesses will be part of the mine's supply chain.

"The businesses of Moranbah should pick up some business out of this particular mine, so hopefully the company will support the business people within the community of Moranbah," he said.