Last week, city officials discovered in a roster of invoices that copper tubing used by the city's water department for water projects was missing.
A rough estimate shows that between $38,000 and $80,000 worth of copper was taken.
A recycler in the area may have bought the tubing, Mayor Mark Jenkins said.
The tubing, three-quarter of an inch and one inch in diameter, was on spools when it was taken, said Gate City Police Chief Jason Cox.
An investigation is being conducted by the city police and the Virginia State Police.
The state police were asked to take part in the investigation in order to ensure there is no suggestion of impropriety, Jenkins said.
Jenkins also called for a special closed meeting of the Town Council at 10 p.m. Monday to request the administrative leave of two city employees.
The leave is administrative, not disciplinary, Jenkins said. It is paid leave and will last at least until the regular council meeting on Tuesday.
"It isn't that they appear to be involved, but due to their positions I knew they would be put under scrutiny," Jenkins said. "I didn't want them to be put in a position where they could be accused of anything after the fact. (The leave) is mainly for their protection."
Their names were not made public.
Anyone with information about the missing copper can call the Virginia State Police post in Castlewood at (276)762-2112.