Staff at the Wansbrough Paper Mill in Watchet have been told the mill could close this December.
It is a major employer in West Somerset with around 170 workers.
It is owned by DS Smith, a lead supplier of paper and packaging across Europe.
DS Smith has released a statement about the proposal:
“Following a review of the long term economic outlook for the Wansbrough paper mill, today we announced to employees at the mill that we are proposing to close Wansbrough Mill and are entering a period of consultation with employee representatives. The process will take into account all possible options for the future of the site.
"This announcement in no way reflects the commitment and efforts of our employees who continue to support our business.
"We will work closely with Union and employee representatives throughout the consultation process to ensure the best possible outcome for all parties. It would therefore be inappropriate to comment further until the completion of the consultation process.”