Xstrata Coal announced the name change yesterday and said the mine project would be known as Mangoola Coal.

Xstrata bought the project from Centennial Coal for more than $400 million.

Mangoola was chosen as the new name for the project because of local significance and the fact that the landmark of Anvil Hill itself would not be mined, Xstrata's chief operating officer Mick Buffier said.

"Mangoola is an indigenous word relevant to the area and our proposed open-cut operation will be located along Mangoola Road," Mr Buffier said.

He said the company wanted to avoid any confusion between the mine and the hill.

"Continued use of the Anvil Hill name would only serve to mislead the community regarding which areas would be affected by mining," he said.

Denman resident Ray Barry said his history research suggested Mangoola is an Aboriginal word meaning place of cockatoos.

Construction on the mine project, located west of Muswellbrook, is yet to start.