Miners at Wollongong Coal who stuck by the company through its hard times - including not being paid for weeks last year - are being asked to take a pay cut that could amount to 40 per cent for some of them.
If they don't accept the pay cuts, which include axing penalty rates, they have been told 50 jobs could go and the Wongawilli mine may be put into care and maintenance mode, shutting down production.
Either way it is likely at least 20 people will lose their jobs.
A roof collapse at the Wongawilli mine has buried the single longwall shearer (cutting machine) there. Multiple sources have told the Mercury it is unrecoverable and the machine, valued at tens of millions of dollars, is lost. This has meant the Wongawilli mine has been significantly less productive.
The Mercury has spoken to several miners from both the Russell Vale No.1 and Wongawilli sites, all insisting on anonymity for fear of losing their jobs.
While they may reluctantly drop some conditions if necessary to save the mines, the size of the cut is a bitter pill for the 300 workers to swallow.
Last year they worked for free for six weeks, and took reductions in work hours, to help the miner - then known as Gujarat NRE Coking Coal - survive.
The Mercury understands workers have been asked to rescind a recent 4.5 per cent pay rise, renegotiate a productivity bonus that can form up to $480 of a weekly wage, and remove penalty rates. This could amount to a 30-40 per cent pay cut; more for miners who work weekends or nights.
The pay cuts have been described as temporary, but without a timeline for the workers to be paid back.
"We voted against it obviously, as probably anyone would do, if you're asked to take a 40 per cent cut," one worker said.
"We worked for six weeks for no pay to keep the place open - so then to be told we have to take a 40 per cent pay cut ... it's a bit of a slap in the face.
"At the price they want to pay for us to go underground and work in a dangerous environment, it's no good."
Workers have rejected the company's request to renegotiate their enterprise agreement at on-site meetings this week and will meet again on Friday.
The penalty rates will be a particular sticking point. Afternoon shift receives a 12.5 per cent loading and night shifts 25 per cent, as compensation for the harsh and dangerous conditions underground.
The proposed pay cuts are part of a review the company is performing into its Illawarra operations.
A company spokeswoman declined to answer specific questions about the situation at the mines.
"Wollongong Coal is continuing talks with the employees and their union representatives to fully explore all avenues to mitigate and minimise redundancies," she said in a statement.
"This has and will continue to involve numerous meetings and briefings with relevant stakeholders."
Wollongong Coal has not made any announcements to investors via the stock exchange about how dire the situation is at Wongawilli.
Union members at the mines are represented by the CFMEU, whose district vice-president Bob Timbs was reluctant to comment on the negotiations.
"We'll continue to consult and negotiate with the company to derive the best outcome possible for our members," he said.
He said it was not clear how many people would take up a company voluntary redundancy offer, which closes on Friday.
The pay cut offer comes just a week after Wollongong Coal warned the NSW Planning Department that hundreds of jobs could go if a temporary expansion was not allowed at Russell Vale, as it could mean that mine was placed into care and maintenance mode.