TATA Steel will mothball one of its plants at the Llanwern Steelworks in Newport, a move which unions have said could see 250 jobs axed.

The company will keep its hot strip mill at Llanwern – but only its Port Talbot mill will continue manufacturing.

It is understood the job losses will mostly affect agency workers. Staff met with management this afternoon to discuss the news.

The company said staff currently working at Llanwern on the hot strip mill will be redeployed within the business but a Tata spokesman admitted agency workers being made redundant is "highly likely". 

It released a statement stating it told staff at its South Wales-based Strip Products business of the need to reduce costs and focus on manufacturing higher-value products.

Unite’s regional trade union officer John Toner told the Argus: “We believe that there are going to be up to 250 job losses. We are awaiting confirmation on that.”

He said the effect could be “devastating” both in the short term and long term for steel manufacturing in Newport.

He added: “I think the communities of Newport and Gwent may well be destroyed…It is extremely sad it is coming to this.”  

Newport East MP Jessica Morden said the news was a crushing blow for the city and hopes to meet with Tata and UK government ministers.

She said: “The news that TATA is to mothball the hot strip mill yet again is devastating news for all the affected workers and their families.  I hope that it will prove only to be a temporary measure.  

“With other MPs in the Parliamentary Steel Group, I have been calling for intervention from the UK Government to stand up for steel and support the industry, and today’s announcement is further evidence of this need.”

And Newport East AM John Griffiths added there was an initial sign agency staff could be redeployed to Port Talbot if they wanted to be but that the move was “very worrying”.

The director of Strip Products UK Stuart Wilkie said Tata had invested heavily in South Wales, both at Llanwern and Port Talbot, but that it had struggled in difficult trading conditions. He said the company will now focus on “differentiated products” to boost business.

He said: “Surging, and often unfairly traded, imports have combined with a strong pound to create a very challenging business environment. The changes we have told employees about will reduce our costs and enable us to focus on generating more value from our products, which will improve our competitiveness.

Meanwhile, a Welsh Government spokesman said: “It is extremely disappointing to hear that Tata Steel is to mothball facilities at Llanwern as a direct result of the challenging conditions in the steel sector globally. We have repeatedly lobbied the UK Government for urgent action to address issues such as high energy costs that are disadvantaging the steel industry across the UK against our overseas competitors. We will continue to work with Tata Steel to identify any ways we can assist operations in Wales and to push the UK Government to recognise the importance of the steel industry and the issues it faces in the UK.” 

Last month Tata Steel announced 720 jobs would be lost across the UK because of the low cost of steel being imported into the country and high energy costs.

GMB national officer David Hulse said: "We all know that these are dark days for the steel industry, not only in the UK but pretty much everywhere else too.

"However this company is blessed with the most highly-skilled and dedicated workforce I've ever come across and I have no doubt they will see this company through providing they're given a fair chance."

Welsh Conservative Shadow Minister for Business and South Wales East AM, William Graham, said the job losses could be a "sledgehammer blow".

He said: “These reports are shocking and – if true – these job losses will be devastating, not just for Newport, but for the Welsh economy as a whole.

“This is a real sledgehammer blow for the families of all those affected.

“Time and again Labour’s First Minister has trumpeted his relationship with Tata, even going so far as to claim a five year investment would sustain jobs.

“It hasn’t – and that relationship has clearly faltered significantly. Labour’s Carwyn Jones should set out exactly how he sees Tata’s future in Wales."

And business minister Anna Soubry said: “There is no doubt that the steel industry is facing very challenging market conditions, with global overcapacity, steep falls in prices and currency devaluations.   

“However the Government continues to work closely with the sector to provide help where we can. My department has provided steelmakers with millions of pounds in compensation for energy costs and recently voted to extend anti-dumping measures on certain Chinese steel products.

“I will continue to meet with companies like Tata and provide support where we can.” 

The Federation of Small Business Wales’ head of external affairs Iestyn Davies said the potential job losses could deal a “serious blow” to Newport.

He said: “We hope that there will be opportunities for some of those skilled workers who look set to lose their livelihoods to find work among smaller employers in the Newport area. However, it will be hard to find work for so many people.”