The underground mine produced 1.2 million tonnes of coal in 2011.

Peabody’ has 11 other operations in Indiana and Illinois that will keep operating.

Employees were given worker adjustment and retraining notification letters allowing them 60 days to organise a job transition. The move affects about 230 employees.

Peabody said it was studying the possibility of employing the workers at another Peabody operation.

The company has coal mines in Daviess, Gibson and Sullivan counties in southwest Indiana.

Peabody is expected to incur a one-time, non-cash charge estimated at $US75 million after tax in the quarter ending September 30, 2012, largely related to a write down in the value of the mine’s assets.

Peabody’s fiscal second-quarter earnings fell by 30% on acquisition-related charges and lower revenue per tonne in Australia.

The company lowered the predicted sales outlook for the year and, based on results for September 4, its stock is down 37% since the start of the year.

Coal companies have struggled this year due to some utilities switching from coal to cheap natural gas to generate electricity. This has led to a downturn in coal production and a trend where many coal producers are struggling to operate.

A weakening market has forced coal companies, including Alpha Natural Resources, Walter Energy and Consol Energy, to cut production. It has even led to Peabody spin-off Patriot Coal seeking Chapter 11 bankruptcy protection.

Peabody is the leading coal producer and reserve holder in the Midwest region. The company serves metallurgical and thermal coal customers in more than 25 countries.