Aluminium giant Alcoa will close its Anglesea operation where 85 people are employed in coastal Victoria.
The coal mine and power station has operated for 46 years, previously supplying about 40 per cent of power for the Point Henry smelter in Geelong, which shut in August 2014.
Alcoa has not been able to sell the site since then, and on Tuesday said it would close on August 31, with only some of the workers to be offered alternative jobs.
Australian Workers Union state secretary Ben Davis said the workers were told on Tuesday morning.
While some people wanted it closed for environmental reasons, it would have an impact on the local economy, he said.
"It's a terrible piece of news in a small community. There will be 80 to 85 jobs disappearing in August," he told 3AW radio.
Premier Daniel Andrews says Victoria will offer any support possible, including skills training and payroll tax credits, to the 85 workers.
Environment Victoria chief executive Mark Wakeham said they empathised with the workers but the closure would end community exposure to high levels of sulphur dioxide, and reduce greenhouse gas emissions.
"However we'll be working hard with communities and state and local government to ensure that full rehabilitation of both the mine and power station is carried out, which should create many local jobs if it is done properly," Mr Wakeham said.
Victorian Greens energy spokeswoman Ellen Sandell said Alcoa's failure to find a buyer showed coal power was on the way out.
"Anglesea is the first brown coal domino to fall and Hazelwood must be next," she said.
But Opposition Leader Matthew Guy still believes there is a future for coal resources in Victoria.
"There is a future for coal in this state, there will always be a future for the Latrobe Valley and I believe whether or not it is clean coal technology or other technology ... our state should look to improve the way we do business in our coal resources," he said.
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