“Workers coming on and off shift today were told of the decision to shed the jobs by the end of the month,”Central Queensland News reported on Monday, adding that in the firing line was a mix of permanent and contract jobs.

Central Highlands Mayor Peter Maguire said he was concerned about impacts to nearby coal town of Emerald.

“There are going to be some full-time positions involved,” he said.

“It is unfortunate any way you look at it, because some of the people involved will live in this town and it is going to have further impact on our numbers.”

Rio did not reveal the number of job cuts in its statement.

“The Australian coal mining industry is facing extremely challenging conditions, with prices continuing to decline through 2014 and the Australian dollar remaining strong,” a Rio spokesman said.

“We have worked to reduce costs and improve productivity across all of Rio Tinto’s Australian coal mines, but still more needs to be done.

“Regrettably, a number of roles at the Kestrel mine need to be reduced, as part of ongoing efforts to ensure the operation is competitive.

“We will be consulting with all employees about these changes and providing support for those affected.”

In July, Rio lowered its 2014 Australian hard coking coal production guidance from 8.2 million tonnes to 7.4Mt. The Kestrel mine produced 1.39Mt of hard coking coal in the first half and 197,000t of thermal coal.

Last year Kestrel had a workforce of more than 500 employees and contractors.