The Blue Mountain Lumber mill near Tapanui in the Clutha District is to close due to worsening trading conditions.
Winstone Pulp International radically reduced the mill in March this year to see if it could operate viably, reducing employee numbers from 110 to 45.
But the company told remaining employees on Wednesday that the stronger New Zealand dollar and a fall in domestic demand left it with no option but to close.
Employees will receive redundancy payments. The company will also assist them with access to supporting government agencies and advisory services.