Italy's ILVA steel mill which employs thousands of workers announced it was suspending operations on Monday after a magistrate issued seven arrest warrants for managers and ordered production seized.

ILVA said in a statement that it would appeal the magistrate's decision, which is part of a long-running dispute over pollution from the plant.

It said the magistrate's order made it "impossible to sell its products," adding that this would mean the immediate "closure of the Taranto plant and of all plants belonging to the group that depend on supplies from Taranto."

The plant, the biggest in western Europe, has been running at reduced capacity since magistrates ordered parts of it closed in July after an inquiry into damning environmental reports which showed high cancer rates in the area.

Italian media reports said the closure would affect 7,000 ILVA jobs directly and possibly thousands more in the rest of the country's steel sector.

The Taranto plant in southern Italy produces an estimated nine million tonnes of steel per year -- around a third of the country's total production.

The Fiom metalworkers' union, which is part of Italy's biggest trade union Cgil, called on workers at the plant to resist the company's closure order by remaining at their posts and come in on Tuesday as they would do normally.

Union leaders urged Prime Minister Mario Monti to take action, threatening otherwise to hold a demonstration outside his offices in Rome on Thursday.

The government meanwhile called a meeting with local officials and trade unionists on Thursday, while the employers' federation Confindustria warned the closure would cost the state 250 million euros ($324 million) a year.

The dispute has pitted workers fighting to keep their jobs in a recession economy despite possible health hazards against environmentalists and prosecutors who want the site be cleaned up after decades of heavy pollution.

ILVA on Monday insisted there was "an absolute inconsistency over any excess in mortality that could be ascribed to its industrial activity".

Among the seven current and former managers targeted by the arrest warrants was Fabio Riva, vice-president of Riva Group which controls ILVA. The group's president, his father Emilio Riva, has been under house arrest since July.

They are accused of crimes ranging from criminal association to causing an environmental disaster to extortion.

ILVA's president Bruno Ferrante and the plant's director, Adolfo Buffo, are also being investigated for failing to abide by judicial decisions.