The particleboard plant has been based at Knowsley Industrial Park for 12 years, employs 220 people and has a production capacity of 500,000m3/year.

There have been long delays to the reconstruction programme of the plant due to the difficulties in obtaining the necessary planning approvals, following the fire that occurred in June 2011.

This coupled with the current economic climate and the downturn in the construction industry, have affected the viability of the plant.

Sonae Industria is one of the largest wood based panels producers in the world. The product range includes particleboard, MDF, hardboard and OSB

Nigel Graham, managing director of Sonae Industria (UK) Ltd, said: "It is with great sadness and regret that after 12 years of operating in Knowsley, consultation will commence on the future of this factory."

The factory suffered a series of fires, closures and rebuilds over the years. Three people were also killed in accidents.

A fire closed the factory for a month in 2007, and another last year resulted in a long closure and a £35m rebuild in which a demolition worker was killed. Two contract maintenance workers were also killed in 2010.

The plant reopened at the beginning of the year after several months but despite the investment, Sonae was unable to reach agreement with planners about installing new cleaning equipment for recycled wood that was vital for new plant.

Sonae said if the plant closed, jobs would be lost at its plant and sales operations at Knowsley, Kirkby, St Helen’s and Merseyside. There was also the loss of 500 indirect jobs among suppliers.