Some miners at Helensburgh's Metropolitan mine will be forced out of a job and onto the "unemployment stockpile", according to a union official.
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Mine owner Peabody is looking to axe around 150 jobs less than two months after it gained government approval to open up three new longwalls - news which made workers think their jobs were safe.
"We normally see these types of things coming," said the CFMEU's Bob Timbs.
"But this absolutely caught us off guard to tell you the truth, we really didn't expect this."
Peabody has put out a call for voluntary redundancies, which ends on Friday, but Mr Timbs doubted there would be anywhere near enough takers to make the cuts the company wants.
"Our view is that, through the voluntary redundancy scheme, they're not going to have enough numbers and we believe there will be forced redundancies," Mr Timbs said.
"For some of the guys it will be a bit of a golden handshake but for others it's going to be devastating for them. On the back of COVID-19 and other redundancies throughout the southern coalfields the likelihood of a lot of those guys that they make forcibly redundant picking up alternate work in the coal industry is not very good."
Mr Timbs said the CFMEU would push Peabody to "carry" as many of its members as possible through the coronavirus-created downturn.
"We're bitterly disappointed with Peabody," he said.
"We understand the position they're in but big business should be trying to shoulder the burden of the outcome of COVID-19, not adding to it.
"That's what they're doing, they're adding to the unemployment stockpile that's building at the moment.
A Peabody spokeswoman confirmed they were looking to cut workers, saying the company was "taking proactive steps to protect the long-term sustainability of its Metropolitan mine".
"Like many other Australian mining operators, Metropolitan has been affected by incredibly challenging global economic conditions caused by the COVID-19 pandemic and, as a result, we are aligning our production levels and workforce needs with current coal demand," she said.
She said Peabody would consider redeploying workers who chose not to take voluntary redundancy to other roles at Helensburgh or at other mines.
"We know these conversations come at a time when our people are already pressured by the current COVID-19 pandemic and we very much regret the impact this process will have on our employees, their families and the community," she said.
"As we begin this process, Metropolitan commits that any affected employees will receive their full redundancy entitlements and will be offered outplacement assistance and counselling to help them and their families during this difficult time."
She said the longwall mine expansion would be unaffected by the job cuts or the fall in demand for coal.