More than 200 jobs could be at risk if state-owned-enterprise Huntly East coal mine cannot resecure its biggest supply contract.
Solid Energy has confirmed it is in the process of renegotiating Huntly East's contract with New Zealand Steel's Glenbrook mill, where the majority of the mine's coal is sent.
But the Waikato Times understands the contract is at risk of being lost to an Indonesian supplier.
Indonesia had large open-cast mines with lower operating costs than those in New Zealand, and a supplier there has been sending coal to Glenbrook for at least the past five years.
It also refused to discuss the Government's plans to partially float the company on the open market, referring the matter to Solid Energy.
Solid Energy spokeswoman Vicki Blyth confirmed "commercially sensitive" negotiations with New Zealand Steel were currently underway for a new five-year supply contract.
However, she would not elaborate on why the contract length was shortened from 10 years to five years when the last contract was signed in 2007.
The relatively high cost of Huntly East coal was raised as an issue prior to the 2007 signing, and at that time Solid Energy said the mine would be closed if it could not secure a new long-term contract.
Mrs Blyth said Solid Energy did not have an exclusive contract with Glenbrook, and about 10 per cent of the mill's coal came from other sources "including Indonesia".
But she would not be drawn on the impact it would have on the Huntly East operation if the Glenbrook contract was lost.
The current contract will expire in June next year, but Mrs Blyth could not say how long similar negotiations had taken in the past.
The Times has learned a new employee was about to move to New Zealand from Britain when he was told that he may wish to reassess his options as his future at the mine would be uncertain.
Mrs Blyth said she was unaware of the matter, and the company was still hiring.
A New Zealand Steel spokeswoman was reluctant to comment.
"New Zealand Steel is currently in discussions with Solid Energy around a coal supply agreement renewal," she said. The woman said historically the supply agreement had been renegotiated every five years, but the Times understands it used to be a 10-year contract prior to 2007.
The Engineering, Printing and Manufacturing Union lead organiser Ray Urquhart said the union had not been notified about any issues at Huntly East, something Solid Energy was contractually obliged to do if there was going to be redundancies.
Mr Urquhart did not want to speculate on what might happen before next June when the current Glenbrook contract expires.
The office of state owned enterprises minister Tony Ryall refused to comment on the Solid Energy contract matter yesterday.
Employees: About 200
Contractors: Up to 40
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