The works will be delivered by Hargreaves working in conjunction with the council and Mine Restoration.
A team of 26 workers selected from the local community will restore 129 hectares, taking approximately 12 months to complete.
The Dunstonhill surface mine, originally operated by Scottish Coal, was left unrestored following the company's liquidation.
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Hargreaves' restoration plan will improve the visual impacts of the site while removing considerable safety concerns.
As part of the wider Kyle Forest project, the company will also work with project stakeholders to include the historical Lethal Hill into the scheme, addressing an issue with access to the war memorial.
Steven Anson, Managing Director for Hargreaves Coal, said: "Hargreaves has been delivering restoration projects at surface mines across Scotland for over two years and we’ve already restored nearly 200 hectares.
"We’re delighted we’ve been chosen to deliver this project and at the same time have the opportunity to address the longstanding issue with Lethan Hill war memorial."
Councillor Leader Douglas Reid said: "The contract with Hargreaves will utilise the £3m received under the relevant restoration bond for the land reformation of the former open cast coal site."
(LM)
