Shares in New Zealand coal miner Pike River Coal Ltd dropped sharply after reports of an explosion at its underground mine about 50 kilometers (30 miles) north of the town of Greymouth.

Police reports say there has been an explosion at the Pike River Coal Mine on the West Coast.

"It's not good news at all, they (police) say there are between 25 and 30 miners unaccounted for, after a big explosion at the mine," Greymouth mayor Tony Kokshoorn told Radio New Zealand.

Emergency services were racing to the Pike River Coal Processing Plant near the town of Atarau on the west coast after police received reports of an explosion, police said in a statement.

Pike River Coal's Australian-listed shares dived when the news broke, losing as much as 15 per cent of their value.

At 1537 AEDT, stocks shed nine cents, or 12.7 per cent, at 62 cents.

The Pike River mine produces high grade coal used to make steel. It has been in a tough year with the production forecast for June 2011 being cut in half to between 320,000 tonnes and 360,000 tonnes of hard coking coal from 620,000 tonnes previously.

With Reuters