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 will only use its equivalent in Port Talbot for manufacturing for the time being.

It is understood the job losses will mostly affect agency workers. Staff met with management yesterday 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."

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.

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."

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."