The packaging company's UK paper division, St Regis, has announced the proposed closure of the Monmouthshire mill following a 90-day consultation, with up to 135 jobs on the line.

The mill produces around 150,000 tonnes per year of semi-chemical fluting paper, a resilient product used to package hazardous goods, and DS Smith claims it is the "most energy-intensive" of its production operations.

The firm said its energy costs had doubled in the past three years and St Regis has been unable to pass this on to customers, leaving the mill with an operating loss of 3m per year.

Demand for the speciality form of corrugated case material (CCM) has also dropped as customers switch to low-cost products, said the firm.

DS Smith has estimated the closure will cost the company 22m: one third from redundancy costs and the remainder in the write down of assets.

Amicus GPMS assistant general secretary Tony Burke called it "another blow to the UK paper and board industry".