A community leader says the closure of two Central North Island mills will be "catastrophic" for local towns.

Hundreds of people are set to lose their jobs after one of the Central North Island's biggest employers announced it will close down two of its mills - for good.

In recent weeks, Winstone Pulp International had been meeting with energy company Mercury and government ministers to find a way to keep the Karioi and Tangiwai mills open. But the company made the call on Tuesday afternoon to close its two mills, blaming unsustainable spot energy prices.

Mercury previously denied it was responsible for the closures, saying the prices were similar to those charged to other large corporates, such as Tīwai aluminium smelter. Community leaders and ministers had been rallying behind the scenes to cut a deal that would keep the mills open.

Liz Booker, who helped to launch the Rescue Ruapehu petition, told Checkpoint the closures would be "catastrophic" for Central North Island communities. Despite "ministers at the highest level", workers and the mill company "fighting so hard to get to a solution", their efforts had been in vain, she said.

The 24-hour delay of a meeting with workers had been a "glimmer of hope that something may be achieved at highest levels, but obviously not", she said.

The future looks bleak for the affected communities, Booker said, adding they were "effectively being cancelled".  "230 workers - all have families, we have big families - but even if it was two kids that's nearly 1000 people," she said.

"If we have 1000 people leaving a community between Ohakune and Raetihi's - population 2300 - do the math."

Many workers had already left the region ahead of the announcement, she said.

"I was speaking to a mother yesterday, and her daughter had been texting up the night before [about jobs elsewhere]: 'Oh Mum, do you want this? Mum, do you want that?' because she's packing and going to Aussie. There's no work here."

The closures would "put a new ghost in ghost town", Booker said.

"We will fight tooth and nail to stay here. But we don't wanna go on the dole.

"We wanna feed our families and we wanna stay in our whare, but obviously, despite the massive intervention at the highest levels of the country - just not good enough."