A witness said sparks were flying off a freight train moments before the wagons derailed, partially blocking State Highway 1, about 7.30pm.
The wagons broke away from the northbound freight train on a level crossing between Gorge Rd and Nelson St.
KiwiRail staff were on site with heavy machinery today, clearing up the coal and trying to right the wagons.
A KiwiRail spokesperson said it was hoped the wagons would be shifted by this evening so that work could begin on repairing about 300 metres of damaged track, Fairfax reports.
Last night, Dunedin man Mike Owen said he was travelling to the city from Invercargill, when he heard the roar of the train.
"The train was going past and it got louder and louder and I thought ‘this is odd’ and then I saw sparks coming off it high in the air and then part of it fell off the track."
There were about five cars on the road when the incident occurred and it was fortunate the wagon did not derail near traffic, he said.
"It made a real mess.
"There was a lot of coal everywhere.
"If the carriage derailed on the Balclutha side it could have damaged the closest car.
"It was just lucky it was on the other side of the road."
Part of a train track switching device was bent high in the air after the derailment, he said.
No cars were involved in the incident, and no-one was hurt, she said.
A New Zealand Fire Service spokesman said appliances from Balclutha and Clinton attended the incident.
