More than 200 jobs could go at Solid Energy's Huntly East coal mine if it is unable to secure its supply contract.
Solid Energy is currently in negotiations with New Zealand Steel's Glenbrook mill, which buys the majority of Huntly's coal, Fairfax NZ reports.
However the miner may lose its contract to an Indonesian supplier instead.
Huntly has faced numerous troubles over the past 12 months, coming under scrutiny regarding allegations that it switched off the methane sensors at the mine to maintain production
The coal mine was actually forced to halt production in June after inspectors identified a build up of lethal gases.
At the time inspectors from the NZ Department of Labour's High Hazards Unit (HHU) issued a Prohibition Notice on both coal development (preparing underground resource blocks for mining) and extraction (coal winning from the face and transporting it from the mine to stockpiles) but allowed other underground duties to continue.
According to the Waikato Times, and Indonesian coal miner has been supplying Glenbrook to a degree for around five years.
It is believed that the high cost of coal from the Huntly East mine has been the reason for this, and the extended contract negotiations, after the price was initially raised as an issue during the last negotiations in 2007.
The current contract is due to expire in June next year, with no guarantee of its renewal.
About 95% of the coal mined at Huntly is railed directly to the mill at Glenbrook.