The company told workers on Tuesday that its proposed Blakefield North underground coal project near Bulga has been put on indefinite hold “as a result of continued low prices in the global thermal and coking coal markets”.

In a statement Glencore said the market “does not support the proposed project” and the expansion would be mothballed “until we see improvement in the economic climate”. 

For the 340 employees and 60 contractors working at the Upper Hunter underground mine it means that once the firm’s Blakefield South underground mine finishes up in 2017 they may no longer have a job.

Hunter MP Joel Fitzgibbon said the news was “devastating” for the workers in his electorate.

“It means on the eve of Christmas hundreds of families in my electorate face an uncertain future,” he said.

The head of the mineworkers’ union in the Hunter, Peter Jordan, said the “natural transition” to Blakefield North would have added another four years to the mine’s life.

“It was always intended to move into the north while finishing off the south to give continuity of the mine and workforce,” he said.

“They had already completed a lot of the development work to go into the north, but apparently the Board has said no more money for the north development.”

“It’s a worry for the underground sector given Glencore closed the Ravensworth underground last year and West Wallsend is due to close in July next year.”

Glencore has shut down 15 per cent of its Australian coal production and chief executive Ivan Glasenberg has said he will close mines that are not making money. 

But the company said it remains “confident … that our Hunter operations will play an increasingly important role in meeting this future demand”.

“Presently, however, we have to ensure that the volumes and qualities of coal we produce are aligned with market requirements.  We will not push incremental tonnes into markets that don’t want them or need them,” the statement read.

Mr Fitzgibbon said the decision to halt the project shouldn’t be used as a vehicle to talk down the coal industry’s future in the region. 

“It’s a time to stand behind the industry and the people who work in it,” he said.

He said the diversification of the Hunter’s economy in the last two decades had been made possible by the strength of the coal industry.

“Yes coal production in the Hunter will end one day but while we have relatively clean coal in the ground we should be using it to continue to grow our region’s economy,” he said.