The last UK-owned steelmaker will start commissioning a new forging press this summer after the Government agreed to help fund the £160M project.

The investment will help Sheffield Forgemasters compete for major contracts to supply key components for the next generation of nuclear power stations.

UK Business Secretary Lord Mandelson is set to announce that the company will receive a government loan of £80M to help pay for the 15kt press and finishing workshop.

Westinghouse, the US nuclear reactor provider, has agreed to advance £40M worth of forward orders, while banks and private equity providers will make up the balance.

Lord Mandelson will say: "Forgemasters makes heavy-forged castings for advanced engineering projects – especially in the civil nuclear supply chains.

"There are just one or two other companies in the world with of the kind of capability the new forge will provide. And its availability in this country will boost UK deployment of new nuclear.

"It is brilliant news for the civil nuclear supply chain in Britain, and will help them compete against the best in the world."

The new forging press is expected to create 200 jobs and a further 200 jobs in the company's supply chain. Forgemasters believes that once operational, the press will double its turnover from £120M to £250M