Tata Steel will receive £500 million ($620 million) support package from the UK Government to make its Welsh steel plant more sustainable, but industry sources say as many as 3000 employees could lose jobs.

Tata Steel, which is part of the Indian conglomerate Tata Group, is set to receive the cash injection to turn the two coal fired furnaces at its Port Talbot steelworks into electric arc versions.

The company employs 8,000 people in the UK, with half based in Port Talbot, near the South Wales city of Swansea, but switching the furnaces could mean job losses of up to 3,000, ccording to industry sources citing in UK news reports.  

“The agreement with the UK government is a defining moment for the future of the steel industry,” said Natarajan Chandrasekaran, chair of Tata Group, said in a statement from the UK Government.

“The proposed investment will preserve significant employment and represents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales.”

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.”

Charlotte Brumpton-Childs, national officer for UK general trade union GMB, earlier told the Guardian: “Government intervention in the steel industry is long overdue, but imposing a programme without proper worker consultation is unacceptable.

“GMB has urged ministers and Tata Steel to have a longer-term view on the decarbonisation of steel. It is not a just transition if thousands of jobs are sacrificed in the name of short-term environmental gains.”

(Reporting by Imogen Lillywhite; editing by Seban Scaria)