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About 35 jobs will be lost when Bathurst Resources closes its Canterbury Coal Mine near Darfield.
The company has blamed the cost of regulatory processes for the closure.
Acting chief executive Russell Middleton said the job losses will be staged over the next year, with workers retained at the company where possible.
He said Bathurst is disappointed as it had worked hard since buying the mine in 2013 to turn it into a well-run operation.
The mine will continue supplying coal to Fonterra's Darfield milk processing site until June.
It comes after the company made an application to expand the coal mine by 18ha. Environment Canterbury received about 630 submissions in relation to the application, most of which opposed the move.
Forest and Bird was one of the organisations against the expansion.
A spokeswoman said it was concerned about the ecological and environmental impacts.
"Our concerns are around freshwater contamination in the already stressed Selwyn Waikirikiri catchment, and the loss of native species and habitat, especially wetlands," she said.
"We are not surprised at the number of submissions. We have had concerns about the expansion of Bathurst's Malvern Hills coal mine for some time."
-NZ Herald and Star News