A project that could inject hundreds of millions of dollars into Broken Hill's economy and create 780 full-time jobs is creeping closer to construction.

Canadian company Hydrostor has signed a binding agreement with base metals and exploration company Perilya for access to Perilya's Potosi mine, on the outskirts of the city.

The facility will store compressed air underground and is expected to generate 200 megawatts of power that would be used as a back-up supply for Broken Hill.

An estimated 260 full-time positions will be created each year during the construction phase, which is estimated to take three years.

There are expected to be 70 ongoing jobs once the project is complete.

Transition 'makes sense'

Hydrostor vice-president of business development Martin Becker said accessing to the mine would fast-track the process.

"You could've added another 12 months if we hadn't had this agreement in place," he said.

"One of the key benefits of this arrangement with Perilya is we get access underground immediately.

"Our cabin that we're going to build is roughly 600 meters below ground and we can get underground immediately, so that will accelerate the construction phase."

Mr Becker hopes workers at Potosi will be able to transition across to Hydrostor when the mine's life finishes in the middle of next year.

"That's something that we're working through with Perilya at the moment — it makes sense," he said.

The Hydrostor project has an estimated life span of more than 50 years.

'Fantastic opportunity'

Funding for the project is expected to be secured by the middle of 2024 and local businesses are eyeing off possibilities.

"It's also a fantastic opportunity … for local suppliers, contractors, service providers to participate in the construction and then the ongoing operation of the facility," Mr Becker said.

Fabtec operations manager Simon Campbell said about 75 per cent of the business's work already involves mining operations, including the Potosi mine.

He would like to be involved in the Hydrostor project as it progresses in the next few months.

"As far as steel fabrication goes, we believe we'd have that well covered," Mr Campbell said.

He is optimistic about future opportunities in the city, which is also home to the Cobalt Blue project.

"With all this going on around town, I think it's really cementing a future for Broken Hill," Mr Campbell said.