The steel company, Corus, has admitted that its plant in Llanwern, on the outskirts of Newport, is facing a critical time, but has denied rumours that there are plans to close it.

The site still has losses running into millions of pounds, despite improved performance and investment.

Clearing of the former steelworks is under way

The management at Corus have been meeting union leaders, and the staff to talk about the problems facing the industry.

They are said be claiming the losses at the plant at untenable and are urging every member of staff to improve the plant's performance and to cut cots.

Last year 1,300 jobs at the works were cut, and Corus admits it is "crunch" time for the plant.

The firm has announced a special strip base in the centre of Newport is moving to the plant and a handful of workers could be made redundant as a result.

Overcapacity

The news is no surprise to steel experts who say there is still overcapacity in the industry worldwide and it remains a highly competitive sector.

Stephen Hill, Professor of Economic Development at the University of Glamorgan in Pontypridd, said: "Llanwern is having the kind of problems it has been having for a sustained period.

"There is nothing new in this - there are long-term structural changes in the steel industry.

If we look at Newport and Llanwern in a decade's time, it may be very different."

But John Griffiths, Labour Assembly Member for Newport East, said he is confident that the future of the plant is not in doubt.

'Importance'

The Welsh Assembly Government issued the following statement: "We hope the relocation of the Whitehead works is good news for Llanwern and that staff cuts can be achieved voluntarily.

"We also hope there will be a positive outcome from discussions about the future of Llanwern and will reinforce the importance we place on the continued operation of efficient steel-making to the south Wales economy."

In August this year, plans for a �750m programme for the redundant half of steelworks site - to create an entire new suburb of the city of Newport - were unveiled.

The project would be the largest regeneration scheme in Wales since Cardiff Bay and could create 7,000 new jobs.