Hundreds of striking Italian steel workers occupied offices at the ILVA plant in Taranto on Tuesday, a day after the company said it would shut down due to legal action over massive pollution.

The Taranto plant in southern Italy produces nine million tons of steel a year, or around a third of the country's production, and the closure of the mill as well as other ILVA plants is estimated to affect 7,000 jobs directly.

Thousands more jobs in the Italian steel industry could be impacted.

Around 1,500 ILVA workers also staged a march in the port of Genoa in northern Italy, blocking a local motorway with heavy industrial machinery.

The government has called a meeting for Thursday at which the environment ministry is expected to insist on keeping parts of the Taranto plant open while the company works on cleaning up the area after decades of heavy pollution.

"We are working with (Prime Minister Mario) Monti and the other ministers for a solution," Environment Minister Corrado Clini told reporters.

ILVA said on Monday it would have to suspend operations after prosecutors seized its production and issued seven arrest warrants for managers.

The plant, the biggest in western Europe, has been running at reduced capacity since magistrates ordered parts of it closed in July after an inquiry into damning environmental reports which showed high cancer rates in the area.

The company has denied any link between its activities and the cancers.

The dispute has pitted workers fighting to keep their jobs amid high unemployment in a recession economy despite possible health hazards against environmentalists and prosecutors who want the site cleaned up immediately.

The environment ministry is also in a stand-off with local prosecutors as it tries to find a middle ground that would keep jobs and ensure a clean-up.

The employers' federation Confindustria meanwhile warned that closure of ILVA facilities in Taranto could cost the state some 1.0 billion euros (US$1.3 billion) a year in welfare and redundancy payments.

"The closure of the plant could put Italy's manufacturing production on its knees, with a heavy impact also on buyers," Confindustria said.

Copyright Agence France-Presse, 2012