The CFMEU have accused Downer EDI of abusing 457 visas, claiming the company sacked 100 Australian workers while retaining foreign staff.
Last month, Downer announced it was cutting 106 people at Boggabri mine after Japanese owner Idemitsu cut production from seven to five days a week.
CFMEU district president Peter Jordan claims the union discovered Downer had 457 visa workers on site who were to keep their jobs, Newcastle Herald reported.
Downer spokesman Michael Sharp said the six men from Papua New Guinea were "specialist diesel fitters" with skills that could not be found in the local workforce.
However Jordan said the men are "mechanical fitters", which was hardly a "specialist" trade.
Jordan said 40 of the domestic workers laid off have the same skills and more experience.
"This is another example of a company looking for the cheap, quick fix during the boom with no consideration for long-term local jobs and skills,” Jordan said.
The 457 visa scheme has been heavily criticised in recent months.
Following a rise in the visas over the last year and claims of abuse within the system, Prime Minister Julia Gillard announced that her government intends to tighten the use of the visas and aims to put “Aussie jobs first”.
The government changes are to include a requirement for employers to demonstrate a genuine shortage of potential employees before nominating positions for 457 visas and raising the English language requirements for certain positions.
In addition, they would enact stronger compliance and enforcement powers to stop employers who routinely abuse the 457 system.
Both unions and the Gillard Government have claimed companies have abused the 457 system.
CFMEU National Assistant Secretary and head of the Construction Division Dave Noonan called for legislation to ensure an end to abuse of the system.
“We need legislation that forces employers to be honest and accountable to skilled Australians who are looking for work. If there is a genuine shortage proven, then and only then, can employers take this route; as a safeguard against systemic abuse of these vulnerable guest workers,” he said.
However the mining industry has previously reacted angrily to the CFMEU's proposals, labelling them as 'extraordinary' and 'at odds with the values of the Australian community'.
AMMA's Scott Barklamb slammed the scheme, stating that "the Australian mining industry needs a diverse range of employee skills and experience to be internationally competitive".
"Migrant workers play a small but important role in securing future projects and the widespread employment, social and economic opportunities these create for all Australians.
"The industry fundamentally rejects the creation of an underclass of workers based on where people come from."