British Steel is preparing to axe up to 2,000 jobs as part of a cost-cutting programme, according to a report, even as its Chinese owners seek large subsidies from the UK government.

The potential staff cuts, reported by the Sunday Times, are said to be a key plank of plans to replace its coal-powered blast furnaces with electric arc furnace (EAF) technology producing "greener" steel.

The switch could unlock new funding for Chinese group Jingye, which has owned British Steel since 2020, including up to £300 million of taxpayer funding, according to the report.

A spokesman for British Steel said the firm was committed to "providing long-term, skilled and well-paid careers for thousands of employees and many more in our supply chains".

But he added it was "continuing to assess our options".

"As part of our journey to net zero, it is prudent to evaluate different operational scenarios to help us achieve our ambitious goals," the spokesman added.

The GMB union has said in response that it does not accept that "mass job losses are the way to decarbonise the steel industry".

"There are a myriad of options available and a fair, just transition for workers must be at the centre of any plan," it added in a statement to AFP.

The Sunday Times story noted no final decision had been made over the 2,000 possible job losses.

British Steel is battling losses believed to be running at £30 million ($36 million) a month, according to the Guardian.

The cuts would decimate its 4,500-strong workforce at its Scunthorpe plant and headquarters in northeast England, it noted.

The UK government said its "commitment to the UK steel sector is clear", noting a funding boost to facilitate greener steel production by Tata Steel at its Port Talbot site in south Wales.

"We continue to work closely with industry, including British Steel, to secure a sustainable and competitive future for the UK steel industry," a spokesperson added.

Jingye declined to comment.

It announced in February plans to cut up to 260 jobs in Britain after being hit by soaring energy costs.

British Steel has also said it plans to shut the coke ovens at its Scunthorpe plant to help the group "build a green and sustainable future".

The UK government revealed in September it would provide £500 million ($621 million) to fund a new electric arc furnace at Tata Steel's Port Talbot site. However, 3,000 layoffs still loom there.