Solid Energy has dropped a contractor at Ohai opencast mine in Southland.
The company says Stracon was involved in repeated safety breaches.
The latest incident involved an employee working alone when the rules say another worker should be on site.
Stracon's status was already tenuous after a truck crash in December.
Solid Energy says the company has lost confidence in the contractor's ability to meet health and safety expectations.
The Engineering, Printing & Manufacturing Union says safety would be less of an issue if work was kept in-house.