Government will set aside $25 million every year year to help coal-dependent communities rebuild their economy when a local mine closes.
The new resources for rejuvenation scheme will be funded by royalties the state receives from coal companies.
Deputy Premier John Barilaro said the fund would "ensure stability for the long haul" for coal communities.
"We are setting aside funds so those coal mining communities, which produce such a valuable resource for our state, can plan what their future looks like," he said.
Treasurer Dominic Perrottet said "mining will be around for decades to come", but "there will naturally be a transition" for the industry.
"Any government needs to not just govern for the here and now. We need to make sure we leave our state and nation a better place than we found it," he said.
"Today's announcement is not a handout to mining communities, it's a handshake for the great work they do in driving the NSW economy."
The money will be available to any community currently eligible for the $75 million dollar resources for regions fund, which includes Gunnedah. The $25 million future fund is on top of the resources for region fund.
Mr Barilaro said the state receives about $1.6 billion in royalties from coal companies every year.
Asked if the $25 million fund would be enough for the entire state, Tamworth MP Kevin Anderson said Gunnedah would get its fair share.
"I'll be at the front of the queue for us, for our region. But again this is about balance. Gunnedah has been a huge part of mining for many, many years and we've seen the coexistence of agriculture and mining. They do complement each other when in the right location and this is a good example of getting that balance right today," he said.
Lock the Gate NSW spokesperson Georgina Woods commended the government's announcement, which she said should help smooth the transition away from coal as demand for the mineral declines around the world.
She said it was vital the fund be managed by locals, for locals.
"The last thing we want to see is bureaucrats in office buildings in Sydney making decisions for regions they know nothing about," she said.
"If a local first approach is indeed enshrined in this fund, then this is a very welcome first step on the road to better preparing our coal dependent communities for a world that meets crucial climate targets and where coal plays a much more diminished role."
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