British Steel confirmed it is considering the closure of the blast furnaces in Scunthorpe with the resulting loss of around 2,000 jobs.
Chinese-owner Jingye Group wants to replace the furnaces with electric arc alternatives, which it says are part of its de-carbonisation plans.
"While decarbonisation is a major challenge for our business, we're committed to transforming British Steel into a green and sustainable company providing long-term, skilled and well-paid careers for thousands of employees and many more in our supply chains," a spokesperson told the BBC.
Unions estimate the move would see between 1,500-2000 jobs go in the town.
Reports at the weekend suggested a £500 million package was being put together by the government to support the company in its switch or similar to the deal brokered by Tata at Port Talbot in Wales, which is also switching to electric arc furnaces.
That move is expected to see up to 3,000 jobs go at the Port Talbot plant.
Closing Port Talbot and Scunthorpe will mean the UK no longer has the capability to produce high-grade steel using iron ore and coking coal.
Soaring energy costs have put the future of blast furnaces in doubt in many countries, with electric arc furnaces, that use scrap, seen as a cheaper-to-run alternative as they also run on lower temperatures.
GMB Union's Charlotte Brumpton-Childs said the closure would be "a hammer blow" for UK steel and "devastating" for the people of Scunthorpe.