Solid Energy is to cut coal production by almost a quarter from July, as demand dries up amid a global reduction in steelmaking.
Although it has confirmed export orders for 10 shipments of coal for the first three months of the year, Solid Energy will cut production at the Stockton mine in the Buller district by 20% mid-year.
The mine provides hard coking coal to steelmakers in Asia and elsewhere.
Customers deferred four shipments of Stockton coal in December, and Solid Energy says it's likely demand will continue to weaken over the next year and a half.
The State-owned coal miner says reduced export demand and prices will result in less revenue and it's looking to cut costs.
It expects to lay off 50 personnel at the mine in Buller from June.
However, chief executive Don Elder says plans for a new $100 million processing plant there will create another 80 jobs and enable the mine to be used for a further 20 years.
Dr Elder says the new plant should be operational in early 2010.