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Newcastle had its beginning when a group of convict escapees discovered the first-known coal deposits in 1791. They did not inform the authorities because they did not want to be recaptured. British soldier Lieutenant John Shortland found a coal seam while looking for the escapees in 1797, and because of this, the area became a real prospect for a settlement.

Shortland also first found a river James Cook had overlooked in 1770, naming it the "Hunter", after Governor Hunter. For awhile, the river was known as the Coal River. After Shortland took a sample of the coal back to Sydney, it took only a year before workers on ships began collecting coal from the riverbanks and selling it in Sydney.

To supply workers to mine the coal and cut timber, a convict camp was established for hardened criminals in 1801. It was first known as King's Town, after Governor King. From this settlement came the city of Newcastle.

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