BlueScope will receive over $100 million from the federal government to support the reline of the No. 6 blast furnace at Port Kembla.
The $136.8 funding follows negotiations between BlueScope and the federal government on the government's signature Safeguard Mechanism, which requires the country's heaviest emitters to reduce their emissions every year.
Revisions to the policy acknowledged BlueScope role as a critical, trade exposed industry, and included $400 million in grants for large emitters in the steel, cement and aluminium industries.
These changes enabled BlueScope's reline of the No. 6 blast furnace to go ahead, after CEO Mark Vassella warned that earlier versions of the policy would imperil the project.
After the changes were announced, Mr Vassella said they recognised the challenges facing BlueScope.
"Now, subject to the final form of the legislative rules and the government's additional support for industry, Bluescope's previous concerns in respect of potential adverse impacts from the [Safeguard Mechanism] have been materially alleviated," Mr Vassella said at the time.
Liberty Steel will also receive $63.2 million for the purchase and commission of an electric arc furnace in Whyalla, South Australia.
The funding now announced will ensure that the blast furnace reline goes ahead, maintaining steelmaking in Port Kembla and providing a bridge to low carbon and low emissions steel making in the future, energy and climate change minister Chris Bowen said.
"This $200 million investment in the steel sector is about securing the long-term future of the steel industry in Australia. As we undergo the transformation to Net Zero it is vital that we support our industries to adopt and manufacture cleaner technologies."
Approximately 250 additional workers will be needed during the blast furnace reline and the project will retain the thousands employed to produce steel in Port Kembla once the current blast furnace reaches the end of its life.
The Port Kembla steelworks is the largest steel production facility in Australia and the Australian arm of BlueScope's operations can produce up to three million tonnes of steel. Strong demand in the building and construction and infrastructure sectors has driven increased sales in the past year, with demand for local steel set to continue in the build out of the renewable energy transition, Member for Whitlam Stephen Jones said.
"Our government wants Australia to be a manufacturing powerhouse. This investment boosts the Port Kembla Steelworks and local jobs, while ensuring steel making remains internationally competitive and sustainable."
Member for Cunningham Alison Byrnes said the grant would support local jobs and projects.
"This turbo charges the investment to reline the blast furnace by BlueScope, securing thousands of jobs in the region," she said.
"Steel is vital to achieving our renewable energy transition and for the construction of new housing and the Illawarra is a crucial player in these national objectives."