Solid Energy is cutting jobs, suspending mining operations and reviewing other businesses, as part of a drastic overhaul as it faces a $200 million fall in revenues this year.
Hundreds of jobs are either going or are threatened and the state-owned company plans to cut spending by $100 million as part of changes designed to absorb the impact of plunging world coal prices.
On Wednesday, Solid Energy announced that 63 positions will be axed at its Huntly East mine in Waikato, which employs about 230 people, and voluntary redundancies are being sought.
It will also stop work on the upgrading of the ventilation system at the mine, meaning 60 outside contracting jobs will be lost.
Solid Energy says 140 jobs must go in coal operations and at its head office.
The company has also suspended operations at its Spring Creek mine on the West Coast, to take effect immediately pending a review, affecting about 230 staff and 140 contractors.
It says the underground mine in the hills behind Dunollie north of Greymouth has struggled to be profitable for some time and staff will be consulted before a final decision is made.
Coal from Spring Creek is exported through the Port of Lyttelton, while most coal from Huntly East is consumed by the Glenbrook Steel Mill. Solid Energy also runs five open cast mines, but they appear not to be affected.
Last week, Solid Energy announced a nationwide review of its operations, following a poor financial performance and the drop in international coal prices.
Chief executive Don Elder on Wednesday denied that the job losses are aimed at increasing the value of the company ahead of its partial sale by the Government.
Mr Elder insists the cuts and scaling back of spending on capital are about the falling price of coal, not boosting its share price ahead of any float. He says revenue is forecast to be down by a third this financial year, due to the lower price of coal.
Show loyalty to workers, says mayor
Grey District mayor Tony Kokshoorn says Solid Energy should return the loyalty shown by miners.
Mr Kokshoorn told Radio New Zealand's Checkpoint programme on Wednesday that closing the mine would be a knee-jerk reaction and he will work with miners to try and convince the company to keep it open - although he acknowledges it will be tough going.
"These miners could have chased the big dollars in Australia, but elected to stay with the security of Solid Energy and right at the moment their jobs are very much threatened indeed.
"We have got a little window of opportunity to convince Solid Energy over the weekend that that is not a proper thing to do."
Mr Kokshoornsays he has already met with Solid Energy chief executive Don Elder, who said his main goal is to save the company.
Waikato District Councillor Graeme Tait lives in Huntly and told Checkpoint the news comes as a real blow.
"The only place some of them will get jobs is maybe in Australia ... it's going to be devastating for the whole town really."
The miners' union, the EPMU, says the proposals are not a done deal and Solid Energy must enter into meaningful consultation with the workers.
Spokesperson Garth Elliot told Checkpoint workers are very angry about the situation when told by management on Wednesday and walked out of the meeting feeling as unsure of the future as they did when they walked in.