"We do our best to look for redeployment opportunities for them elsewhere within out business and at other mines in the industry."

The underground mine, in the southern highlands of NSW about 75 kilometres south-west of Sydney, has been operating since 1979 and last year produced 2.1 million tonnes of metallurgical coal used in steel making.

Like other miners, Glencore has been hit hard by the collapse in commodity prices linked to slowing demand from China. It has also slashed production of copper and oil as well as cutting investment and costs.

"The decision has been made as a result of continued low prices in global coal markets, which has meant the economic return from reserves still available at Tahmoor are not sufficient to warrant the investment required to mine them," Glencore said in a statement.

Global metallurgical coal prices have dropped from more than $US300 a tonne in 2011 to around $US94 in step with weakening steel prices.