Nearly 2000 mine workers stand to lose their jobs at the Everest platinum mine near Lydenburg in Mpumalanga.
The mine is closing down for at least six months or more for safety reasons.
The closure comes after an underground inspection by the department of minerals and energy revealed that the mine's support structures were collapsing due to the unusually high rainfall on November 23. The findings showed that the mine was in danger of completely collapsing.
One of the unions representing workers, Solidarity, said it was concerned about the dark Christmas that lay ahead for nearly 15300 of Lydenburg's residents following the announcement.
"Almost 19percent  of Lydenburg's residents could be affected by the retrenchments. This could have tragic consequences for the town's local economy, which could be worsened by the country's difficult economic conditions," said Jaco Kleynhans, Solidarity spokesman.
The mine's activities were suspended from last Sunday until further notice. In a notice sent to unions the mine could not say whether the closure will last for six months or more.