A MONMOUTHSHIRE paper mill is due to close with the loss of 135 jobs.

DS Smith plc, Sudbrook Mill, Caldicot, will close at the end of May because of soaring energy costs and a drop in demand.

The mill is losing £3m annually, with the company blaming the doubling of fuel bills over the last three years.

Kevin Watkins, one of the workers at the mill, said employees had already been given 90 days' notice.

"The news is absolutely devastating," said Mr Watkins, 42, of Taff Road, Caldicot.

"I feel bad for the other workers, those who have children and a family to support. I am lucky that it is just me and my wife, Claire, but it will be very difficult to find a job in this area now because there isn't another big employer around. It has wiped everyone out."

It is the second redundancy blow in three years for Mr Watkins, as he lost his job at the Llanwern steel site, and he has started applying for other jobs.

A statement on the company's website said the firm would try to help employees find new jobs, and that around a third of the £22 million closure costs would be given in redundancy payments. The mill has given generations of families jobs since it opened in the 1950s. It produces around 150,000 tonnes of a speciality form of cardboard casing every year.

Made from recycled paper and wood pulp, the product is mainly used to make boxes and trays but demand has fallen as customers switch to a lower cost paper.

The company has six mills and is one of the leading UK producers of recycled paper. It has a turnover of around £1.6 billion and employs about 11,900 of whom 7,500 are in the UK.

The firm has operations in France, Germany, Italy, Spain, Belgium, Ireland, Poland, Turkey, Czech Republic, USA and New Zealand.

Monmouthshire councillor Ron Stewart said it was a huge blow for the community. He said: "We can't believe it. So many families work there, fathers, sons, brothers and uncles, it is tremendously sad news."

The council is seeking a meeting with the Welsh Development Agency to discuss the situation.