Managing director Douglas Ritchie said the cutbacks were unavoidable given the reduction in allocation levels for the remainder of 2007.

“We need to reduce our total production this year by approximately 20 percent to adapt to these revised allocation levels,” Ritchie said.

He said the production cuts would also mean the loss of 250 contractor positions at Bengalla, Mount Thorley Warkworth and Hunter Valley operations.

“We are working with other parties involved in the coal logistics chain to develop a long-term strategy to provide a more stable basis for industry to operate in,” Ritchie said.

The company has repeatedly posted lowered results over the past two years because of congestion at the Port of Newcastle due to a shortage of capacity in the Hunter Valley coal chain.

Coal & Allied’s current situation echoes that of fellow Hunter Valley producer Austar Coal Mine, which was forced to stop weekend production and cut the jobs of 56 full-time employees and 23 contractors last month.