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Britain will provide up to 500 million pounds in subsidies to Tata Group to secure the future of the country’s largest steel plant in Port Talbot, Wales, in a deal that could result in up to 3,000 job losses.

As part of the deal announced on Friday, Tata Steel will inject around £750m into Port Talbot, allowing it to switch to greener steelmaking using electricity rather than coal.

The government says this is the largest support package in British history and will help safeguard around 5,000 jobs. Tata employs around 8,000 people in the UK, 4,000 of whom are based in Port Talbot.

The plant, home to two of the UK’s four remaining blast furnaces and the UK’s largest single source of carbon emissions, is expected to bear the brunt of job losses because electric arc furnaces are less labour-intensive.

Both blast furnaces are nearing the end of their useful life and closure will require shutting down a number of associated assets, including the plant’s coke ovens. Tata will build an electric arc furnace as part of a total investment of £1.25 billion, including £500 million from the government. The UK steel industry employed more than 300,000 workers at its peak in the 1970s and now employs an estimated 39,800 people, according to trade body British Steel.

The industry faces stiff competition from imported products. It is also the UK’s largest industrial emitter of carbon dioxide. The government says replacing the blast furnaces will reduce overall UK carbon emissions by around 1.5%. The company warned on Friday that the site’s carbon-intensive assets could “potentially undergo a deep restructuring”.

The agreement with Tata caps more than a year of negotiations and comes just weeks after the British government agreed to provide Tata with a separate £500 million aid package to support a £4 billion battery factory in the UK.

The company has struggled to make profits from its UK steel operations and last year warned that its operations were threatened with closure without government support.

Tata Group chairman Natarajan Chandrasekaran said the proposed investment would “retain significant employment opportunities and provide excellent opportunities for South Wales to develop an industrial ecosystem based on green technology”.

Chancellor Jeremy Hunt said it was “right that we are prepared to step in to protect this world-class manufacturing sector and support South Wales as a hub of green growth”.

The company said it would consult with workers over the proposal, but union leaders warned they would “fight tooth and nail” against any proposed redundancies.

Unite general secretary Sharon Graham said the plans were “shameful, short-sighted and unambitious”. “United will work tooth and nail not only to save these jobs but to create more steel jobs.”

Community leaders from the union representing steelworkers said the company had assured them they would consult with workers about which decarbonization approach to take.

Roy Rickhuss, the union’s general secretary, said: “The unions should have a seat at the table throughout the process because it is clear that the interests of the workforce have not been taken into account in the rush to sign a decarbonisation deal.” Cheap . “

Labor, which has pledged to invest £3bn in decarbonising steel, has slammed the deal.

Jonathan Reynolds MP, Labour’s shadow business and trade secretary, said: “Only the Conservatives can afford to spend £500m of taxpayers’ money to lay off thousands of British workers.

“The UK needs an industrial strategy that invests alongside industry to deliver a return on the taxpayer’s investment while protecting our national capabilities and workforce.”

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