CEMENT group Blue Circle has confirmed that "a reduction in capacity" remains an option of its review of production at its Weardale plant.

The company, which employs 170 at the Eastgate site, is halfway through a three month efficiency drive which management say has already "identified options through an analysis of manufacturing volumes."

The announcement of the production review came a month after Blue Circle narrowly saw off a hostile £3.65bn takeover bid from French rival Lafarge which had sparked fears among its staff at the cement works.

The company confirmed as many as 350 redundancies would be sought nationwide over two years, with the firm hoping most would come voluntarily and from staff taking early retirement. The announcement came as part of a review of operations across its eight UK works and head office.

Blue Circle Cement's UK MD Mark Chellew said: "We are continuing to review production capacity at Weardale and no decision has yet been taken.

"We have an on-going, open and honest relationship with our workforce at the factory and are continuing to keep them informed of the progress of the review team's work."

A five-person operational improvement team of middle managers was formed at the Eastgate works in June focusing its work on examining production options for the factory. The team will continue its work searching for efficiency improvements until at least September.

The Eastgate works pours at least £8m a year into the area, and is vital to the fragile local economy.