Spring Creek Mine, north of Greymouth, will close after Solid Energy failed to find a buyer.
The state-owned enterprise, which owns the coal mine, says the decision is a "reluctant" one, with chief executive Tony King calling it a "disappointing outcome".
But the closure was "inevitable" given the volatile coal markets and the "significant" capital needed to start the mine up again.
"We had maintained a level of optimism through the sales process that a buyer would recognise the potential for economic redevelopment of Spring Creek Mine, however that simply hasn't happened.
"Interest in the site has been muted throughout an extensive sales process and closure is now the only remaining option," Mr King says.
The underground mine at Dunollie currently has nine staff who were told of the decision on Friday.
A detailed closure plan will now be put in place.
Solid Energy entered voluntary administration in August 2015 after its directors concluded there was not realistic way it could refinance its significant debt.
From September of that year the process of selling the company's assets began.
The company says Spring Creek is their only mine which hadn't attracted a buyer.