The deal would secure £1 billion for the group’s Port Talbot steelworks but could lead to as many as 3,000 job losses, according to Sky News.
Under draft plans, the Government would commit approximately £500 million of public funding, while Tata Steel’s Indian parent company would agree £700 million of capital expenditure over a multi-year period, the report said.
The company would reportedly commit to building electric arc furnaces, which offer greener, less labour-intensive ways of producing steel than traditional blast furnaces.
Industry sources close to the negotiations told Sky that as many as 3,000 of the company’s staff based in the UK could lose their jobs.
Port Talbot is thought to employ about 4,000 workers.
A Tata Steel spokesman said in a statement issued to Sky News: “Tata Steel is continuing to discuss with the UK Government a framework for continuity and decarbonisation of steelmaking in the UK amidst very challenging underlying business conditions, given that several of its heavy-end assets are approaching the end of life.
“Given the financially constrained position of our UK business, such significant change is only possible with Government investment and support, as also seen in other steelmaking countries in Europe where governments are actively supporting companies in decarbonisation initiatives.”
Unite general secretary Sharon Graham criticised the reported plans and said the union would be “mounting a significant campaign” to protect jobs.
“This Government could make us the green steel capital of Europe – instead they are choosing to follow a job cuts agenda,” she said.
“Unite will leave no stone unturned in the fight for jobs. We will now be mounting a significant campaign on this issue and we fully expect the Labour Party to make a serious commitment to a better future for UK Steel.”
The Treasury and the Department for Business and Trade have been contacted for comment.