Coal miner Bathurst Resources has announced it will close its Canterbury Coal Mine with 35 jobs on the line.
The mine near Darfield, 70km from Christchurch, supplies low sulphur coal to dairy factories and other regional customers.
Bathurst Resources chief executive Russell Middleton said the mine has reached the point "at which the timeframes and cost of regulatory processes outweigh the commercial returns".
He said the company had been working towards economic solutions which were unsuccessful.
The company would look for other sources of coal for its customers, Middleton said.
"There will be staged job losses at Canterbury Coal over the next 12 months.
"We will be supporting our workforce via redeployment within Bathurst where possible, and in finding new employment for the 35 people affected."
Middleton added the company was disappointed with the result.
"We have worked hard to turn around a small mine purchased in 2013 into a well-run, environmentally-sound operation that provides essential energy close to the end user, therefore reducing the transport carbon footprint."
The mine attracted attention is September when activists blockaded the entrance to it, demanding it be shut down.
"We will now commence developing mine site rehabilitation plans in consultation with councils, land owners, neighbours and other stakeholders," Middleton said.