The closure of the Longannet longwall mine in Fife was announced, costing some 366 miners and 150 contractors their jobs. Investigations found it would take tens of millions of pounds to rescue the mine after old workings were hit by the huge flood.
There are also fears that there could be more flooding, which would put lives in danger.
The shutdown came a day after efforts failed to save the Prince of Wales colliery at Pontefract, with the loss of 600 jobs. UK Coal announced that a prospective buyer had pulled out which means the 140-year-old pit is expected to close in August at a cost of some £50 million to the local economy.
Brian Wilson, the Energy Minister, said the decision to stop production at Longannet was "bitterly disappointing for everyone who has worked to secure a future for the mine".
Longannet's future has looked uncertain for some time. The mine has received £40 million in government grants in recent years after a series of geological problems and safety concerns.
It is believed that if the outburst occurred 24 hours before it did, numerous men would have been fatally injured.
