The UK Government and Tata Steel on 15 September agreed on a proposed joint investment package which will secure a sustainable future for steelmaking in Port Talbot, modernise production of greener steel and protect skilled jobs, subject to consultation and regulatory approvals.

Tata Steel is expected to invest £1.25 billion, including a UK Government grant worth up to £500 million – one of the largest government support packages in history – in a new Electric Arc Furnace for greener steel production at Port Talbot, which is currently the UK’s largest single carbon emitter.

This would replace the existing coal-powered blast furnaces – which are nearing the end of their effective life – and reduce the UK’s entire carbon emissions by around 1.5 percent as a result.

Welsh Secretary David TC Davies said: “Steelmaking remains a vital part of the Welsh economy and this huge support package from the UK Government ensures that the industry now has a bright future to match its long and proud history in South Wales.

“We are investing in our steel industry as it makes the necessary transition to greener methods of production and are also putting support in place for the local workers affected by the changes.”

Tata Steel UK employs over 8,000 people, including at Port Talbot, which would otherwise be under serious threat without substantial investment to guarantee its future. Tata Steel also supports around 12,500 further jobs in the upstream supply chain.

After the UK Government intervention, it is expected that the proposal – which remains subject to information and consultation processes led by Tata Steel – has the potential to safeguard over 5,000 jobs across the UK.

The government would also ensure a broad range of support for any staff who are affected by the transition, working with the Welsh Government and Tata Steel to establish a dedicated transition board to support both affected employees and the local economy, with up to £100m funding.

Business and Trade Secretary Kemi Badenoch said: “The UK Government is backing our steel sector, and this proposal will secure a sustainable future for Welsh steel and is expected to save thousands of jobs in the long term.

“This is an historic package of support from the UK Government and will not only protect skilled jobs in Wales but also grow the UK economy, boost growth and help ensure a successful UK steel industry.”

Chancellor of the Exchequer Jeremy Hunt said: “This proposal is a landmark moment for maintaining ongoing UK steel production – supporting sustainable economic growth, cutting emissions, and creating green jobs.

“It is right that we are ready to step in to protect this world class manufacturing industry and to support a green growth hub in South Wales.”

The landmark proposal builds on other major investments in UK green technology by Tata Group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK.

Alongside the UK Government’s proposal for the Celtic Freeport – expected to create 16,000 jobs – and the land at Port Talbot which Tata expects to release for transfer or sale following the transition from blast furnaces, the investment could help unlock thousands of new local jobs and boost both the South Wales and wider UK economy.

Subject to Tata Steel consultation processes, the government estimates that the support package will also protect thousands of jobs in the wider UK steel supply chain.

Tata Group Chairman N Chandrasekaran said: “The agreement with the UK Government is a defining moment for the future of the Steel Industry and indeed the industrial value chain in the UK. It has been an absolute pleasure to work with the His Majesty’s Government and the Prime Minister Rishi Sunak in developing the proposed transition pathway for the future for sustainable steelmaking in the UK.

“The proposed investment will preserve significant employment and presents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales. We look forward to working with our stakeholders on these proposals in a responsible manner.

“The transition to sustainable steelmaking at Port Talbot is also expected to reduce the UK’s entire business and industry carbon emissions by 7 percent, Wales’s overall emissions by 22 percent and the Port Talbot site’s emissions by 85 percent.”