The Government is working to finalise a rescue deal worth £500 million for Tata Steel’s Port Talbot plant this week, following the closure of its blast furnaces, according to reports.

The package of support had been drawn up by the previous Conservative government.

It was set to aid Tata with its plans to build an electric arc furnace, replacing the existing coal-powered process, under ambitions to switch to a more environmentally-friendly form of production.

The Indian steelmaking giant said it would invest £750 million in building the furnace, alongside funding a support package for the employees expected to be made redundant during the transition.

Some 2,800 jobs losses are expected as a result of closing down two blast furnaces at its major plant in South Wales, the first of which was shut in July.

Business Secretary Jonathan Reynolds is planning to make a statement to parliament on Wednesday about the deal, after Prime Minister’s Questions, according to reporting.

Decarbonisation does not mean deindustrialisation, and we will be working to safeguard jobs as part of these negotiations

It is thought that it will be broadly similar to the previous government’s commitment.

Mr Reynolds previously said he believes there is a “better deal available” for Port Talbot and the steel industry as a whole, as he confirmed that negotiations with Tata were continuing under the new Labour government.

He also said he would “make sure that job guarantees” were part of the discussions.

The Government did not comment on the reports that the state-backed deal could be announced this week amid ongoing negotiations with Tata.

A spokesperson for the Department for Business and Trade said: “Steel is vital for a vibrant, secure economy.

“Our steel sector needs a government working in partnership with trade unions and business to secure a green steel transition that’s both right for the workforce and delivers economic growth.

“Decarbonisation does not mean deindustrialisation, and we will be working to safeguard jobs as part of these negotiations, securing the future of steelmaking communities for generations to come.”

Tata Steel has been contacted for comment.