Production has been halted at ArcelorMittal's steel plant in Algeria after workers carried out their threat to launch an indefinite strike, a company spokesman said on Monday.

The trade union representing most of the 7,200 workers at the plant said it called the strike because ArcelorMittal was flouting government guidelines on pay increases, but the company says it is not bound by them.

"The strike has started and the facilities are paralysed as a result of the strike," said the spokesman for ArcelorMittal, the world's biggest steelmaker.   

The union has said workers would stay out on strike until they are given the pay increase they are demanding or the government takes a controlling stake in the previously state-owned plant.

The El-Hadjar factory, near the city of Annaba in eastern Algeria, produced 750,000 tonnes of steel in 2009. Most is for domestic consumption though some is exported to the Mediterranean region.   

ArcelorMittal says it will seek to have the strike stopped through the courts. "From ArcelorMittal's point of view the strike is illegal. There was no conciliation process ... there was no secret ballot of all of the employees," said the spokesman.   

An employee at the plant, who did not want to be identified, said 95 percent of workers were on strike, with a skeleton staff to keep the furnaces ticking over. The furnaces can be permanently damaged if they are switched off.

"We will continue until our demands are met," the worker said. - Reuters