An Illawarra mining contractor employing more than 120 people is closing down after South 32 decided not to renew a labour contract for Appin mine.
The decision by the bosses of Southern Colliery Maintenance will see 126 employees out of work.
In a letter to employees owners Mark Gazzola, Paul de Leeuw and Bill Polychrone said the contract with South32 would end on October 18.
"This is not a result of the way you have performed," the letter stated, "it's a reflection of the direction South32 is going.
"As a result of this and a number of other factors, we regret to inform you we have decided to close Southern Colliery Maintenance from this date.
"We would like to thank everyone that has been a part of the company over the past 21 years and are proud of all that have worked with us and what we have achieved in the industry."
The letter states the company will put out a call for voluntary redundancies, with employee numbers to be gradually reduced through September and October.
Union officials have claimed Southern Colliery Maintenance was "the latest victim" in South32's "campaign" to move some miners onto cheaper work contracts.
Earlier this year South32 ended arrangements with labour hire companies Mastermyne and Nexus.
"Southern Colliery Maintenance is an innocent victim of South 32's campaign to drive contractors with acceptable employer records out of the region," CFMEU South Western District Vice President Bob Timbs said.
"As Southern Colliery Maintenance have made clear, at no stage were they criticised by South 32 for performance issues.
"Their crime was treating their employees ethically and fairly and thereby setting a bad example by South 32's standards."
But a South32 spokesman denied the union claims of a campaign to drive out employers at Appin mine.
The spokesman said changes were being made to deal with the COVID-19 situation and the lower demand for metallurgical coal, which is mined at Appin.
"As a result of the pressures we face, we have recently made changes to some contractor arrangements, coinciding with the end of a commercial agreement with one of our contractors," the spokesman said.
"The changes have been made following a competitive tender process.
"The changes will help ensure we are equipped to operate through the commodity price cycle and sustain our position as a major contributor to the Illawarra economy."
Southern Colliery Maintenance was also contacted for comment on this story.
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