Thai steelmaker SSI is cutting 1,700 jobs and suspending production at the Redcar plant in northeastern England owing to plunging steel prices on world markets.
Sahaviriya Steel Industries (SSI) has "no other option but to mothball its iron and steel making facilities on Teesside," it said in a statement.
"As a further consequence of the mothballing, it is proposed to reduce by 1,700" the number of employees, it added.
SSI said it was hoping to resume production operations "at some point."
It bought the plant near the UK city of Newcastle in 2011 from Indian-owned Corus for about $US470 million ($A668.99 million).
"This is very sad news and a big blow for the workforce and their families," Business Minister Anna Soubry said in a statement, calling a "steel summit" to decide how to help the sector in Britain.
"The steel industry across the UK is facing very challenging economic conditions. The price of steel has almost halved over the past year, with overproduction in the world market."
Trade unions reacted angrily to the news and called for government action.
"The government has got to take some responsibility for this. They can still intervene to save Redcar and the thousands of jobs that rely on the plant," a spokesman for the Unite union said.
David Hulse from the GMB union also called for the government to step in, saying: "It is not too late for them to do so while the furnaces are still burning."