SYDNEY--Job cuts in Australia's mining industry are intensifying, with companies that enjoyed a decadelong boom axing thousands of workers as the value of commodities like coal and gold fall to multiyear lows.

More than 1,000 jobs have been cut this week alone in the mining sector, underscoring the challenge facing Prime Minister Kevin Rudd, who returned to power late Wednesday promising to cushion the economy from the slowing resources investment.

Australia's resources sector accounts for almost 10% of the country's job market--about double the level a decade ago--and close to 20% of national output.

Glencore Xstrata PLC (GLEN.LN) and Peabody Energy Corp. (BTU) became the latest mining companies to lay off workers in a bid to protect margins when falling commodity prices and rising production costs make many operations unprofitable. While many of the job losses involved permanent staff, companies are also axing contractors brought in to operate machinery or run mines as they seek to keep costs under tighter control.

Once the engine of Australia's economy, helping the nation stave off a recession during the global financial crisis, the mining industry is reeling from a sharp slowdown in prices of many commodities amid cooling growth in top trading partner China. Several big companies like BHP Billiton Ltd. (BHP) have canceled or delayed projects, closed mines, and put assets up for sale as the outlook for major commodities worsened.

Glencore said Thursday it would shed about 450 workers and scale back output at its Newlands and Oaky Creek coal mines, both in Australia's Queensland state, due to lower prices, high costs and the strong Australian dollar.

The company--which has already cut hundreds of workers and abandoned plans for a new coal shipping facility in recent months--signaled possible further layoffs as a review of its coal operations continues.

"This is a difficult decision but one that needs to be taken in the current challenging economic conditions," Glencore Xstrata said in an emailed statement.

It came only a day after Peabody said it would also cut 450 jobs from its coal mines on Australia's east coast in response to the market downturn.

"We are taking these steps to secure the long-term competitiveness of our operations," a spokeswoman for U.S.-based Peabody said.

The current problems facing Australia's mining sector partly have their roots in its earlier success. When thermal coal prices surged to a record high above $190 a metric ton in 2008, companies rushed to invest billions of dollars in new mines and lock in space at ports so they could export more raw materials to Asia.

The new supply is now weighing heavily on the market, with Australian coal having to compete for customers with cargoes rerouted from North America and Europe, where there is lackluster demand. Coal shipments into China and Japan--the world's two biggest importers--are up 13% and 9%, respectively, in the first five months of the year, but this hasn't been enough to drain the excess supply.

Underscoring the weakness in prices, Tokyo Electric Power Co. (9501.TO) agreed an annual contract to buy Australian thermal coal from Glencore Xstrata at US$89.95 a ton, a person familiar with the matter said Thursday. That's about half the level of coal's 2008 peak.

Anglo American PLC (AAL.LN) chief executive Mark Cutifani this week estimated about 9,000 mining jobs had been lost in Australia's coal-rich Queensland and New South Wales states over the past year, and warned "those numbers look like they are about to rapidly increase."

Mr. Cutifani, in an interview Thursday, warned Australia's coal industry was now at a tipping point. Anglo American this month said it planned to suspend operations at its Aquila coal mine in Queensland state because it couldn't see prices of the fuel rebounding over the remainder of the year. Shuttering the mine could lead to the loss of up to 100 jobs.

More could be at risk, Mr. Cutifani said. "We have 500 jobs we are desperately trying to hold" at the miner's Drayton South coal project in New South Wales, which was recently delayed due to a government review, he said.

Miners of other commodities are also swinging the ax.

Barrick Gold Corp. (ABX), the world's largest gold producer by output, has cut 87 workers from its Australian operations this month and plans to shut a regional exploration office by the end of the year. The company, which has also announced redundancies at its head office in Toronto and across its U.S. operations, cited an increase in operating costs and falling gold prices for the cuts.

Australia's largest listed gold miner, Newcrest Mining Ltd. (NCM.AU), is trimming about 250 jobs after gold prices fell 26% since the start of the year, largely from its Lihir mine and Brisbane office, which it will close.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires