Solid Energy told workers at the mine Thursday that it would reduce jobs from 193 to 86 by making 93 people redundant and leaving 14 positions vacant.

The company said 29 management and support services staff and 69 workers at the mine would be affected but it would continue the mine under maintenance for the next month while management consulted on which positions would remain.

Solid Energy chairman Mark Ford said he knew the news would have a big impact on local families and the local area and it was hoped the company would be in a position to reinvest in the Waikato once the market improves.

The state-owned company, which has about $390 million debt, has been making cutbacks across its operations “in response to the depressed global coal market”

“We want to keep Huntly East open as we think there is long-term value in the asset and in the short to medium term we want to keep our options open,” Ford said in a statement Thursday.

“But with current international prices and given Solid Energy's need to generate cash and not incur further debt, the economics of mining underground at Huntly East mine do not justify keeping the operation going in its current form.

“We have to get our costs down and we plan to do that at Huntly East by stopping all development work and cutting production to a third of last year's, to about 100,000 tonnes.”

Solid Energy is proposing to reduce the number of working areas at Huntly East mine from three to one, worked on two shifts, five days a week with maintenance and monitoring work carried out at the weekend.

Ford said one of the biggest challenges was that both of Solid Energy’s main customers – New Zealand steel and Genesis – were able to import coal and so the company was competing against a very tough market.

"Our forecast volumes and revenues in the North Island market are both down for the current 2014 financial year,” he said.

“Revenues will drop by 44% on last year and we'll be producing just under 1 million tonnes of coal this year to meet customer demand, compared with 1.6Mt last year.

“This will increase to about 1.3Mt annually for the following four years."

Ford said in the short term most of the coal produced to meet customer contracts would come from the company's lower production cost Awaroa pit at Rotowaro mine.

In the case of New Zealand Steel, which recently agreed a five-year coal supply contract with Solid Energy, Rotowaro coal will be blended with smaller volumes of the higher quality and higher production cost Huntly East coal.