(Adds comments from Industry Minister, source on judge)
MILAN Aug 12 (Reuters) - The jobs of thousands of workers at ILVA, Europe's biggest steel plant, are at risk if the factory in southern Italy has to stop production as ordered on Friday by an Italian judge, ILVA Chairman Bruno Ferrante said in a newspaper interview on Sunday.
"I don't even want to pronounce that word (layoffs) ... But if they block production here, the outlook gets more complicated not just for the almost 12,000 employees, but also for the whole supply chain," Ferrante said in an interview with Italian newspaper la Stampa.
On Saturday, Ferrante said he would appeal a ruling by preliminary court judge Patrizia Todisco saying the factory must not produce steel while it makes court-ordered improvements to its production line.
At the request of prosecutors in Taranto, Todisco had originally ordered the factory's partial closure last month because of concerns that pollution was harming the health of the workers and local residents.
But an appeals court ruled last week that ILVA could remain open as it upgraded its production line to meet regulatory standards, a decision the company interpreted as a green light for continued steel production.
The appeals court also named Ferrante a court administrator of the factory.
But in what looks increasingly like a rift within the Taranto courthouse, Todisco on Saturday said Ferrante was not among the pool of administrators and reappointed Mario Tagarelli, who had been excluded by the appeals court, a judicial source said.
"The closure and turning off of the plant must be avoided at all costs, something that would cause irreparable damage. Nothing will be left untried," newswire ANSA reported Italy's Industry Minister Corrado Passera as saying on Sunday.
Passera said Environment Minister Corrado Clini and Justice Minister Paola Severino were also dealing with the matter, keeping Italian Prime Minister Mario Monti constantly briefed.
In a statement on Saturday, Clini said the decision to stop production may hamper, rather than accelerate, the need to improve and clean up the factory.
"We must not forget that the legal battles and social conflict triggered by the prospect of plant closure could interrupt or seriously delay the clean-up plans for the factory," he added.
The July order to shut down parts of the factory triggered protests from ILVA workers, who live in an area that already faces chronic unemployment and social unrest because of the recession.
The order to halt production brought a chorus of complaints from politicians, trade unionists and industrialists. Italy's employers' association Confindustria expressed serious concern for the effects of the ruling.
"It's a decision that is difficult to understand, which weighs heavily on the company and its ability to carry on," it said in a statement.
"The prospects of a strategic company and the future of tens of thousands of workers are at risk," said Stefano Fassina, economic spokesman of the center-left Democratic Party (PD), one of the two main parties the prime minister depends on for his majority in parliament.
Prosecutors sought the partial closure of the plant, one of the few large industrial sites in southern Italy, to protect public health.
Magistrates, who put several company executives under house arrest, said a detailed study conducted over several years demonstrated that the plant's fumes and dust particles endangered the health of thousands of workers as well as nearby residents. (Reporting and writing by Stephen Jewkes; additional reporting by Vincenzo Damiani in Bari, editing by Alison Birrane, Gary Crosse)