THE closure of a Gwent paper mill with the loss of 135 jobs is set to be a major blow for traders in the area, shop owners say.

DS Smith's Sudbrook Mill near Caldicot will shut at the end of May because of soaring energy costs and a drop in demand.

Workers are now trying to find other jobs, but local store owners fear the axeing of so many jobs will be another body blow for a town still recovering from the loss of more than 1,000 jobs at Llanwern steelworks.

Many of the steel workers lived in and around Caldicot. Jamie Southall, owner of Richard James Clothing, Caldicot, said he was concerned.

"I also have a store in Chepstow which is bound to be affected by the closure. I think the whole of this area will be affected not just Caldicot," he said.

He fears if the workers move from the area to find new jobs, trade will hit an all time low.

Ila Patel, owner of the Spar in Sudbrook said she would lose about 20 per cent of her trade when the mill closes

"I am very sad for the workers and concerned that we will lose a lot of passing trade," she said. "Lots of employees come here or business people come from around the UK.

"We always have good custom from the workers at the mill but that will dramatically change."

Janet Jones of Wye Dean Wholegoods health shop in Caldicot says the future for traders looks grim.

"It is horrendous. When you think about 135 people and their families losing their jobs and having to go on benefits they will not be spending £30 in the store, it will be more like £5 if that," she said.

"The closure will have a catastrophic effect and it leaves you wondering who is going to have to close next."

Monmouthshire county councillor Ron Stewart also says the closure will hit traders hard.

"This mill gave generations of families jobs, fathers, sons, brothers and uncles and it was such a shock when we heard it was going to close," he said.

"Traders in Caldicot will suffer and people are very worried." Councillor Stewart said the area had suffered enough job losses.

He said: "It is another bite into the employment of the area. The mill has been going since the 1950s and its loss will create a void in the employment situation which Caldicot can ill-afford."

A company statement said the firm would try to help employees find new jobs, and that about a third of the £22 million closure costs would be given in redundancy payments.

Workers have also been offered specialist careers advice from the Welsh Development Agency.