The company last week started consultation with its Collinsville workforce over further steps to reduce production at the mine, explaining that lower coal prices and market oversupply have contributed to Collinsville incurring financial losses during 2015.

Most employees at the mine will take annual leave during the shut down for nearly three weeks over the Christmas period.

“In 2016, we will phase down overburden removal and only produce coal from in-pit inventory and field stockpiles,” Glencore said in a statement. “We will reassess the situation during the year.”

The operational changes at Collinsville are expected to affect approximately 180 positions across the 230-strong workforce.

The major reductions in workforce numbers will be initiated by the beginning of March 2016.

“We have support services in place for those employees and their families who are affected by the decision, and we will look at options for redeployment where possible,” Glencore said.

“It is a particularly difficult decision given the significant effort and the improvements made at Collinsville by Glencore and the entire workforce over the last two years in attempting to turn around the mine's financial position.”

The situation at Collinsville reflects the challenges being faced by all Australian coal mines in one of the most difficult markets in the industry's recent history, according to Glencore.

“We will continue with our environmental management programs on the site in relation to spontaneous combustion management, rehabilitation of legacy areas and management of mine water,” the company said.

Thermal coal prices have dropped 43% from $US95 per tonne in September2013 - when Glencore took operations at Collinsville in-house to $54/t in October 2015.

“Glencore will continue to take proactive steps to manage our coal business in the current commodity pricing environment,” it said.