Its Environmental Impact Statement, open for public comment via the NSW Major Projects website, states local metallurgical coal was a "key factor in the ongoing economic viability of the BlueScope Steelworks".

The pitch then goes further, invoking the potential the steelworks may be forced to close if the South32 supply dried up.

"The proximity of the existing Southern Coalfield mines, including Dendrobium mine, to BlueScope Steel's facilities at Port Kembla is a factor in BlueScope Steel's ability to make economically competitive steel," it says.

"BlueScope has previously noted that without local metallurgical coal suppliers it may struggle to remain economically viable at Port Kembla."

South32 supplies about 60 per cent of BlueScope's metallurgical coal. This comes from both the Dendrobium and Appin mines. It's understood there is a supply contract between South32 and BlueScope until the year 2032.

Read more: Caution urged over further loss from Illawarra drinking water catchment

The Dendrobium EIS warns of the high cost of port upgrades were BlueScope to have to source coal from further afar.

"Any increase in seaborne coal supply to the BlueScope steelworks would require substantial capital investment in additional port facilities (estimated to be at least $150 million) and stockpiling facilities, with the additional logistics costs estimated to be between $50 million and $100 million per annum," South32 states in its EIS.

"The continued supply of coal from the Dendrobium mine to the BlueScope steelworks, which would be facilitated by approval of the [expansion] project, would contribute to its ongoing economic viability and associated socioeconomic benefits."

South32 says the expansion would ensure the continued employment of 400 people employed at Dendrobium, plus another 100 for the new project, which it says has a capital investment of "approximately $1 billion".

The two companies - spinoffs from BHP - have not always seen eye to eye on coal pricing, and faced court proceedings in 2015 after a long-running dispute over historical coal price calculations.

The dispute revealed the miner (then Illawarra Coal) relied on sales to BlueScope and South Australian steelmaker Arrium for 25 per cent of its revenue. Since then, Arrium had been put into administration and bought by the GFG Alliance, which later bought the Tahmoor coal mine to feed its SA steel operation.