The company said it would retain only 81 of the 536 union members who work at the Shoal Creek mine in Western Jefferson County to maintain operations at the site.
In a statement, Drummond said the mine was being idled to provide time to evaluate alternatives for Shoal Creek.
“We hope to restart operations in the near future,” Drummond said, "We regret this action, but it is necessary to reduce the losses from this location while alternatives for the future are evaluated."
The company gave notice of possible lay-offs in October this year, when it temporarily shut down the mine.
“Shoal Creek was idled in February of this year due to a methane gas ignition, and while limited production resumed in August, two longwall units were badly damaged and have remained idled,” the company said in October.
“Due to this series of events at Shoal Creek, the lay-off of employees may become necessary in the near future.”
Shoal Creek is Alabama's largest coal mine and one of the biggest in the nation, according to Drummond.
According to the Mine Safety and Health Administration, Drummond had an average work force of 820 people in 2005 and produced 2.2 million tons of coal, the most in the state.