Solid Energy this afternoon confirmed it would cut more than 400 jobs, mothball the Spring Creek mine on the West Coast and reduce operations of the Huntly East mine.
Greymouth will be particularly hard hit as Solid Energy plans to reduce staff numbers from about 254 at Spring Creek to around 32.
After two months of underground work to prepare the mine for "care and maintenance", staff numbers would again be reduced to 20.
The company also plans to cut 63 jobs at Huntly East Mine in Waikato.
It also announced it proposes to cut corporate, support services, and development jobs by 50 per cent.
"We appreciate that this ongoing uncertainty is very difficult for people but the management team has to give staff the opportunity to comment on the further changes that we are now proposing,'' Solid Energy chairman Mark Ford said in an announcement in Christchurch today.
Mr Ford said chief executive officer Dr Don Elder told Spring Creek staff that it had completed its review of the mine's viability and concluded that it could not afford the "ongoing costs of the operation''.
The company will now begin a period of consultation with Spring Creek Mine staff who will remain on full pay at this time.
All underground work at the mine, except essential safety and maintenance work, will remain suspended.
The decision would also affect the jobs of up to another 130 people, employed by contractors, many of whom had been on the site as part of the development project.
If all the proposals are confirmed, total jobs will be cut by 25 per cent to about 1360 - down from 1800 at the start of the year.
"We absolutely understand the potential impact of this proposal on the local community and the wider district,'' Mr Ford said.
"We all do all we can to identify future employment opportunities for affected staff and we have already had some very promising discussions which we hope to confirm in the near future.''
In total, it's proposed that 429 jobs will go.
Mr Ford said: "As I've said many times, this is a very sombre day for this company.''
He said competitors were making "drastic action'' and so must they.
At Spring Creek, for example, coal was worth $120 per tonne, and they needed $200 per tonne to break even.
Spring Creek was a very high cost, low quality mine, Mr Ford said.
It has a history of underperforming, having lost $100 million since 2007.
Mr Ford said the cost of production at Huntly East was "substantially more'' than the current international price for similar coals that major customers can import.
The Christchurch rebuild meant there should be no loss of skills or employment opportunities for the South Island following today's announcement, Christchurch Mayor Bob Parker said.
"Today will be highly stressful and our thoughts are with the miners and their families.
"However, opportunities here in Christchurch can keep families together and enable workers to continue contributing to their communities therefore my message is that you do not have to leave New Zealand for work.
"This city right now needs engineers, builders, plumbers, painters, construction workers and administration staff.''
