Climate Change Minister Chris Bowen has handed BlueScope $137 million in taxpayer funds to keep its carbon-intensive Port Kembla steelworks running normally, as it softens the blow of the safeguard mechanism obligations.

The country’s largest steelmaker will put the funds towards a $1.15 billion upgrade of an old blast furnace at the NSW plant, which uses coal and iron ore to make steel in the same way it has done for decades. This upgraded blast furnace, with minor enhancements, will still be using that process when it is ready for use by 2026, with an estimated shelf life of a further 20 years.