Mining giant BHP Billiton Mitsubishi Alliance (BMA) has announced it is to axe 700 jobs at its central Queensland mines.

BMA is the largest private employer in the Bowen Basin with more than 10,000 employees and contractors.

The cut represented about 7 per cent of its workforce.

Employees and contractors at the Goonyella Riverside, Peak Downs, Saraji, Broadmeadow, Caval Ridge, Daunia and Blackwater mines could be affected, and the company said consultation would begin in coming weeks.

BMA is not the only miner struggling amid a downturn in the coal price.

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Bandanna Energy announced yesterday it was going into voluntary administration and would not proceed with its central Queensland mine.

The United Nations has also warned that coal has no future in the world's energy mix.

BMA asset president Lucas Dow said the industry was undergoing a difficult transition and to be globally competitive the company had to run more efficiently.

He said the workforce reduction was required to remain viable for the long term but would allow the company to operate safely.

He acknowledged the cut would cause uncertainty for employees, their families and the local communities, and said the decision was not taken lightly.

"BMA will continue to work with employees and contractors throughout the process and ensure everyone is treated fairly and with respect," he said.

Local communities shattered by news

Isaac Regional Council Mayor Anne Baker was shattered by the news and said it would be a major blow for the area, including neighbouring regions such as Mackay, Whitsunday, Rockhampton and the Central Highlands.

"It'll touch every aspect of our community economically," she said.

Premier Campbell Newman called on BMA to ensure every assistance was given to staff.

"I am very sad for the men and women who are losing their jobs, and my heart goes out to them and their families," he said.

On the upside, Mr Newman said thousands of other jobs would be created when new mines were developed in the Galilee Basin, west of the Bowen Basin.

"Sadly one door is shutting but another one is opening," he said.

The mining union said the BMA agreement required contractors and labour hire to be cut first, and that should be adhered to.

But Construction, Forestry, Mining and Energy Union (CFMEU) spokesman Steve Smyth said the company was taking a slash-and-burn approach to its operations, and other options had been ignored.

"We've put to BMA in the past the potential for wage freezes, we've done all that," he said.

"Our focus is going to be on mitigating and averting job losses under the agreement."

Another union spokesman, Andrew Vickers, said local residents and businesses would suffer.

"There's nothing else for people to do in those towns - these are mining towns," he said.

"If the mines cut back then people have to leave the town."

Town morale will take a hit, worker says

Maddison Hatton, who works at the Blackwater Mine Workers Club, said businesses were already struggling with rent after an influx of contractors and fly-in, fly-out workers.

She said the job losses would hurt the town's morale further.

"It will bring everyone down," she said.

"It affects a lot of families and businesses, it makes everything slower."