Giant mining firm Xstrata has admitted that a fire broke out on its Hunter Valley coal mine site in New South Wales forcing the miner to evacuate some 55 workers from down below and halt all activities until the cause of fire has been established.

Xstrata said on Friday that mining activities on its Blakefield South underground mine have been suspended and work would not resume until it has been clearly determined that workers are safe to return on site.

Xstrata spokesman James Rickards said that the company has launched an investigation on the incident and workers are ordered to stand down indefinitely. Richards assured workers of continuous pay.

A full assessment of the fire incident's impact on the mining site is now underway, according to Rickards, as he told ABC that "the priority is that no one's underground, no one's been injured and we've been able to shut the operation down and now we're focussed on removing that fire from the situation."

While a definite cause of the fire has yet to be established by investigators, speculations abound that spontaneous combustion could be the possible culprit. Xstrata is not discounting that possibility.

Xstrata has admitted that the fire incident could prove a major setback for its Beltana operation, which only started mining activities in December last year, and added to its current operational woes in Queensland where heavy rains and flooding halted its mining activities in the state.

Rickards said that a definite date on the resumption of operations would be hard to tell as he pointed out that "we've implemented gas monitoring and any decisions regarding re-entry to that underground environment or how long it may take to extinguish the fire will be based on that gas monitoring."

Also, the possibility of detecting the presence of toxic gas has been considered by NSW authorities as the New South Wales Industry and Investment has decided to put up a mobile laboratory at the site to check that dreaded scenario.