Just at the time when one would have thought that British steel was really about to get going, it has just hit some ice. Now, a big shake-up is underway: 2,500 jobs are set to go at the Port Talbot steelworks in South Wales. This is a serious blow-especially as the government has just poured £500 million into greening the plant.

Here’s the scoop: the UK government, with Business Secretary Jonathan Reynolds in the lead, has reached an agreement to construct a new eco-friendly electric arc furnace at Port Talbot. This will decrease pollution, but it is going to change how the whole thing is done at the plant. The company that owns the plant, Tata Steel, will also be contributing £750 million toward the project. However, this investment will not save the 2,500 jobs that are slated for the hatchet.

The announcement was made in Parliament by Reynolds, who admitted it was not exactly what he wanted. He blamed the defeat on the former Conservative administration for being unable to hold out to get the guarantees of jobs that they are now being forced to give up. Reynolds said Labour would have made sure job protection formed part of the deal if they were at the helm from the start.

So what’s in it for the ones losing their jobs? The government is offering better redundancy packages. There may be additional support should the worker link up with a Tata-run training program. The company has pledged to review its future investment in the steel industry as well, alongside Labour’s£2.5 billion support package.

Here is where things get tricky: its two blast furnaces, vital to produce steel from raw materials, are being retired. One was shut down in July; the second is scheduled to be shut down at the end of this month. That will bring production of main steel at the plant to a close. Unions and politicians have expressed a fear that losing the furnaces will damage the economy of the UK and its capability for producing steel on its own.

The new electric arc furnace is more environmentally friendly; however, it requires fewer workers. Some 500 jobs have been created during its building, expected to be completed by the end of 2027.

Labour had hoped to persuade Tata to keep the last blast furnace working and save more jobs, but Tata refused. In all, most of the current Port Talbot staff will have gone by next March, while Tata is even planning to cut a further 300 jobs in three years at its Llanwern steelworks near Newport.

For the casualties, there is some cheering news. As many as 2,000 employees have come forward to take voluntary redundancy. The redundancy packages for them would be more lucrative than in the past: 2.8 weeks of salary per year of service, up to a maximum of 25 years. Besides, there would be a minimum payment of £ 15,000. They can also enroll in one year’s training scheme with full pay in the first month and £ 27,000 as annual salary for the remaining eleven months.

The deal also includes an agreement by Tata to consider further investment in steelmaking capacity. A new government strategy for the steel sector will be published this spring that will examine among other areas primary steelmaking technologies.

Meanwhile, the 2,500 strong workforce at British Steel’s Scunthorpe site in Lincolnshire also face uncertainty. The plant’s Chinese owner Jingye may shut its furnaces before the end of the year. The government says it’s holding talks with Jingye on maintaining one furnace in operation – with a further £500m of state support likely. If confirmed, the plans would leave the UK as the only G20 economy without the ability to manufacture steel from raw materials and would rely on imports for key sectors such as aerospace, rail, and automotive.

It was suggested by unions last year that 2,300 jobs can be retained at Port Talbot through keeping the last blast furnace open for ten more years. The latest deal, though not perfect, is better than the earlier plan proposed by Tata and the Tories, said unions.

Greg Smith, Shadow Business Minister, slammed the deal, saying, “[Labour is] abandoning job protection and steel production to rely on more polluting imports.” He asked if that could “really be the best way to cut carbon emissions?”.

This will be the biggest transformation in Port Talbot’s history: while the new technology is revolutionary, being green; the loss of so many jobs and the end of primary steel production are very big obstacles that remain. The UK’s future in steel depends on how well new investments adapt to changes and can make up for lost jobs.