Australia's struggling coal sector has taken another blow, with the announcement that a long-standing mine in the Illawarra region will shut, at the expense of more than 80 jobs.

The 128-year-old Russell Vale colliery is set to close, after its ASX-listed operator Wollongong Coal (WLC) said it was not sustainable in the current financial conditions.

The closure of the Russell Vale colliery is the latest blow to the struggling Australian coal mining sector. Credit:Adam McLean

"This decision is not taken lightly and we have continually attempted to avoid this unfortunate situation by undertaking a series of workforce restructurings," WLC chief executive Milind Oza said.

The closure comes after WLC had an application to expand the mine rejected by New South Wales' controversial Planning Assessment Commission in April.