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The Sydney Basin developed as the land to the North was bent into a huge Orocline; beginning at about 330 Ma. The land on either side was pulled apart and subsided.
At the time Australia was near the South Pole and so the Basin was filled by sediment from glacial streams flowing from the North.
On the edges of the Basin, on dealtas and alluvial plains, peat swamps developed.
When the sea level rose thick layers of rounded river gravels with sand and clay were deposited over the peat swamps. This compressed them into coal seams.
Photo R Miller
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