Up to 380 jobs could be lost in Newport as Tata Steel says it plans to close its Orb Electrical Steels site.
Trade union Community has called for government intervention and Newport East MP Jessica Morden has described the announcement as "devastating news for the highly skilled workforce."
Tata had been looking to sell the Pill-based business, which they say had been making a loss for several years, but failed to find a buyer.
Tata says it will try to offer employees jobs elsewhere but if the proposed closure goes ahead the factory could be shut by December.
Following the announcement, Economy Minister Ken Skates said it was "extremely disappointing news".
“I have spoken with TATA and made clear the importance of avoiding compulsory redundancies where possible. The Welsh Government will now do everything it can to support individuals, the community and the supply chain affected by this announcement."
Tata say it would cost in excess of £50m to modernise facilities at the Newport plant and that it is not sustainable for them to continue funding the losses made at the site.
Steelworkers trade union, Community claims Tata did not consult with them before the announcement and has called on the government to intervene.
"This is shocking news, which makes a mockery of the understanding we reached with Tata around the jobs guarantee", General Secretary Roy Rickhuss said.
Following the announcement, workers said they were "disappointed" at the way they were told of the news.
Jessica Morden, MP for Newport East, says it's "unacceptable that many [workers] heard this through the newspapers yesterday."