Chinese-owned Yancoal is co-operating with an investigation into the deaths and said emergency services were still trying to retrieve the two bodies, which were trapped about 500 metres underground.

Forensic officers are treating the site as a crime scene and mining operations have been halted.

Peter Jordan, president of the CFMEU's northern mining and NSW energy district, said a 15-metre section of wall had collapsed, after a coal burst. ''There is a bit of a chequered history to the mine but that doesn't mean the mine is unsafe,'' Mr Jordan said.

In 2003, the mine - then called Southland Coal Mine under the ownership of Gympie Gold - was closed after a fire, and remained mothballed until Yancoal bought it in 2004. ''It is a difficult mine and does have gas problems,'' Mr Jordan said. ''You have to be much more careful mining it.''

The collapse occurred 500 metres deep, about 10 kilometres from the portal entry to the mine.

Yancoal stressed that the section of the mine in question is mined using the common ''bord and pillar'' method.

In other parts of its Austar mine, Yancoal uses an unusual mining technology, called longwall top coal caving.

There was some speculation in the industry that the latter method had played a role in the collapse.

Yancoal Australia chief executive Reinhold Schmidt said it would be ''inappropriate'' to speculate on the cause of the deaths. The coalminer said it did not expect to be able to reveal the cause for several days.

''A full investigation into the incident will be conducted,'' Mr Schmidt said. ''Yancoal will continue to work closely with emergency services and the regulators [including the Department of Energy and Resources].''

Yancoal Australia is majority owned by state-backed Chinese company Yanzhou, which has a 78 per cent stake in the group. Yancoal has operations in NSW, Queensland and Western Australia.

The latest fatalities come after a spate of mine deaths in Australia over the past year, including three deaths at the Mount Lyell mine in western Tasmania. A contractor died in December at Glencore's Ravensworth coalmine and Fortescue Metals Group has suffered two deaths since September at the Christmas Creek mine.

Police said the two men killed at Austar were a 35-year-old from Metford and a 49-year-old from Cessnock.

Mr Schmidt said his thoughts were ''with families, colleagues and friends of the two employees in this tragic incident''.

''The safety and wellbeing of all Austar Coal Mine employees and contractors is of primary concern and we are currently providing on-the-ground support to the families of the two employees and our other employees and contractors.''

Shares in Yancoal closed down 7.69 per cent, or 3¢, at the day's low of 36¢.