The Italian government is ready to appeal to the constitutional court against a ruling to halt production at Europe’s biggest steel plant, an official said on Monday, as it seeks to head off thousands of potential job losses in southern Italy.

Prosecutors in the southern city of Taranto late last month ordered the partial closure of the privately owned ILVA steel plant, which employs about 12,000 people, because of concerns its fumes were seriously harming the health of workers and local residents.

The case has become a political headache for Prime Minister Mario Monti’s government, which is seeking to protect jobs at a time when unemployment is at record high. The plant’s owners say thousands of jobs would be at risk if it is forced to shut down.

"We will ask the constitutional court to evaluate whether our powers have been undermined: the powers to conduct an industrial policy," Cabinet Undersecretary Antonio Catricala told Italian state radio.

The government has called for a solution that will reconcile employment with environmental and health issues.

Trade unions on Monday called a two-hour strike in the steel sector and around 800 ILVA workers blocked roads around the plant to protest against a decision by a judge last week that ILVA must not produce steel while it makes court-ordered improvements to its production line.

Two members of the plant’s owners the Riva family, including the group’s founder, and a former ILVA company executive are under house arrest in the case, charged with complicity in creating an environmental disaster.

Monti is sending three of his ministers to Taranto this week to talk to local authorities and prosecutors. Catricala said the government would wait for those meetings before deciding whether to appeal against the judge’s decision.

"The closure and turning off of the plant must be avoided at all costs (since it) would cause irreparable damage," Industry Minister Corrado Passera, one of the cabinet members who will go to Taranto, said on Sunday.

Environment Minister Corrado Clini said on Saturday that the decision to stop production may hamper, rather than accelerate, the need to improve and clean up the factory.

ILVA produced 8.5 million metric tons in 2011, nearly 30 percent of Italy’s total steel output, and is one of the few big industrial plants in Italy’s impoverished south.

A study promoted by the health ministry showed that death rates from cancer in the area were 15 percent higher than in the rest of the country, and 30 percent higher in the case of lung cancer.

ILVA Chairman Bruno Ferrante has argued that the group has already reduced toxic emissions from the plant while acknowledging some shortcomings in the past.

He has said that shutting the Taranto steel mill would entail closing two other plants run by the Riva group in Italy.