A NORTH-EAST dale was dealt a jobs blow yesterday as one of its last major employers announced it was to close.

The 140-year-old Weardale Castings and Engineering Ltd, which employs 58 people in Wolsingham, County Durham, is shutting down over the next two years to make way for a business park and homes.

The announcement is a setback for agencies trying to revive the Weardale economy.

It leaves a multimillion pound eco-village planned on the cement works site as the only proposal that could bring jobs, and that could take many years to develop.

The foundry's managing director, Les Graham, has already been in talks with Banks Development, at nearby Tow Law, over redeveloping the land.

Councils and other agencies said yesterday that they were committed to supporting Weardale.

County Durham Development Company is meeting with Mr Graham today.

Managing director Stewart Watkins said: "We have had a good relationship with the company over the years and we want to help them at this difficult time."

In the boom years of the 1950s and 60s, the steelworks employed 600 people before it was taken over by state-run British Shipbuilders.

It supplied the shipping industry with large equipment such as anchors and rudder horns, relying heavily on the export market in recent years.

It twice came close to closure in 1983 and 2002 until Mr Graham, from Tyneside, arrived in April 2003, forecasting a vibrant future.

Yesterday, he blamed environmental issues and difficulty in recruiting skilled workers for the decision to close.

He said: "In spite of my company's best endeavours to comply with the increasing burden of environmental legislation, it has now become impossible to operate this business in such close proximity to neighbouring houses.

"We have faced difficulty in filling vacancies for local skilled foundry workers and currently employ eight people from Poland in order to keep the plant running."

Gerry Horner, of union Amicus, said: "I am amazed that this is the reason. There are plenty of skilled people looking for work."

John Hamilton, chairman of the Upper Weardale Task Force, described the closure as a major setback.

Iain Phillips, chief executive of Wear Valley District Council, said: "It is very sad. The council is committed to Weardale. We are doing a lot with the task force to try to secure long-term development.

Former shop steward Ken Lally, who worked at the foundry for 29 years, said: "It's a sad day for Weardale once again. First the cement works, now Weardale Steel. There won't be anything like that made in Weardale again. It's a shame."

The dale's MP Hilary Armstrong said: "I regret that we are losing a unique facility.

"We will work with Mr Graham and Banks to see that we get a way forward in the interests of Weardale in the long-term."