The Australian unit of Brazil-based mining giant Vale will have to pay a $63m penalty in order to close the Integra coal mine in the Hunter Valley, claims Australian trade union Construction, Forestry, Mining and Energy Union (CFMEU).
The statement from CFMEU came one week after Vale Australia announced its plans to put the two Integra mines into care and maintenance, making 500 workers jobless.
According to Vale, the two Integra mines, including Camberwell open cut and Glennies Creek underground mines, are no longer economically profitable.
The company has already asked the Glennies Creek workers to stay at home and promised to pay them full salaries. Meanwhile, the job cuts at the Camberwell mine are expected to start in July.
CFMEU northern district president Peter Jordan was quoted by The Singleton Argus as saying that the closure will prove costly for Vale as it will be forced to pay millions in cancelled contracts at the site, as well as for port and rail contracts amounting to $30m a year.
"The fact the company appears to be throwing away around $60m dollars is concerning and adds credibility to the rumour that the mine has been sold," Jordan said.
"We are hearing reports that the open cut mine has been sold to a Chinese company, the Shenhua Group who are involved in the Watermark project near Gunnedah, and the closure is just about changing the workforce arrangements."
Vale has denied that the operation has been sold.
CFMEU said it will meet with Vale again to hear its plans for re-opening the mines.
According to Jordon, there are numerous allegations and rumours circulating and the union is keen to know the real intentions of the company.
"The replacement of a local permanent workforce with contract labour is a big concern," Jordan added.