The UK government has announced the release of £13.5 million in emergency funding to support supply chain businesses and workers impacted by Tata Steel’s restructuring plans at its Port Talbot site in South Wales.

The funding marks the first allocation from a transition board set up to manage the effects of Tata’s shift from traditional blast furnaces to more environmentally-friendly electric arc furnaces, which could lead to the loss of up to 2,800 jobs.

Tata Steel, which is closing one of its two blast furnaces at Port Talbot and is scheduled to shut down the second early next month, is transitioning to less carbon-intensive steelmaking. This move is part of a broader £750 million investment in green steel, supported by a £500 million government package agreed last year. However, the new electric arc furnace is expected to employ fewer workers and will take years to become operational.

In addition to the emergency funds, the government and Tata have set up a transition board, co-led by unions, with access to £100 million aimed at skills development and local regeneration, with £80 million coming from the state and £20 million from Tata. This initial funding is intended to help local businesses, heavily dependent on Tata as their main customer, diversify into new markets and customers. It will also provide support for workers affected by the transition, helping them find new employment opportunities, training, and skills development.

Jo Stevens, the Welsh Secretary and chairwoman of the transition board, will formally announce the £13.5 million funding on Thursday. Stevens, who has a personal connection to the steel industry through her upbringing near Shotton steelworks, emphasised the importance of avoiding the devastating impacts of mass redundancies seen in the past.

As part of ongoing negotiations, Labour has called on Tata to consider retaining one blast furnace until the new electric arc furnace is operational. However, Tata has rejected this proposal, citing higher costs for the taxpayer. Labour has also pledged a £3 billion “green steel” fund to support the industry’s transition, building on the £500 million support package already agreed.

Stevens is expected to visit local manufacturers and Tata suppliers during her announcement, further underlining the government’s commitment to securing a sustainable future for the steel industry in Port Talbot. More announcements regarding further funding tranches are anticipated in the coming weeks.

The emergency funding initiative has garnered support from more than 50 local businesses and institutions, including the Royal Mint and Cardiff Metropolitan University, who have pledged to assist workers displaced by the steelworks’ transition.