An environmentally-friendly "electric arc" furnace at Port Talbot is to be built and government funding guaranteed so steelmaking will not be put on the scrapheap.

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Electric arcfurnace

When a new electric arc furnace is completed, with £500m of taxpayers' cash, and production returns, it will be without coal, iron ore or limestone.

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Blast furnaces use coke in the process of creating "virgin" steel but the process generates carbon dioxide while electric arc furnaces are mostly used to melt down and repurpose scrap steel.

Ministers are preparing to announce that an agreement has been reached to give Tata Steel a grant of £500m towards the cost of its electric arc furnace.