He will remain involved with the company in an advisory capacity, via a consulting agreement.
Executive deputy chairman Craig Ransley will become executive chairman and CEO, and Danny McCarthy will move into the role of managing director.
"Unfortunately due to some ongoing health concerns arising out of an accident, I have made the decision to review my working commitments and have decided to retire and resign as chairman and non-executive director of Terracom," King said.
"When I joined the company in 2017, the company had just purchased the Blair Athol coal mine in Queensland and since then, the company has experienced significant growth, but also faced a number of challenges.
"The company is in a steady position from an operational perspective and the recent improved export coal pricing should provide the basis for the company to deliver stronger results for shareholders going forward.
"I look forward to continuing with the company in an advisory role, through an appropriate consulting agreement, as it executes the strategies put into motion by the board."
Ransley said King had played a critical role in Terracom's overall growth strategy and more recently assisted with the refinance program.
"On a personal level, Wal has been a great mentor and the company has been fortunate to have had Wal's experience and guidance over the last three and a half years," he said.
"On behalf of the board and management team, we thank him for his support and friendship. We look forward to continuing our working relationship with Mr King in his role as advisor."