Coal mining could begin again at Hatfield Colliery in 2007, more than two years after the pit closed.
It is hoped the colliery will produce 2m tonnes of coal per year by 2009
Up to £800m is to be invested in the Doncaster site in a partnership between Powerfuel, which owns the pit, and one of Russia's largest coal mining firms.
Kuzbassrazrezugol has agreed to acquire 51% of Powerfuel to refurbish Hatfield with the aim of restarting coal mining.
The colliery hopes to produce 2m tonnes of coal per year by 2009. A clean coal power station would also be built.
Plans for the plant are at the feasibility study stage, but conditional consent for the development has already been granted.
Initially the cost of the scheme would be around £110m, but with the power plant plans that figure is expected to rise to £800m.
Doncaster North MP Edward Miliband said re-opening the colliery and prospects of a clean coal power plant were very exciting.
"With access to 80-100m tonnes of accessible, good quality coal, 50% of accessible UK reserves, Hatfield pit can make a significant contribution to the UK's energy needs.
"I have been making the case that the Government must ensure that the outcome of its energy review gives the right incentives for developments like those at Hatfield."