Tata Steel, which operates two blast furnaces in Port Talbot, has warned that it could close one of the furnaces if the government does not make long-term plans to support the industry this summer.
An Indian company told ministers that it needs support details in July to justify a potential multi-billion dollar investment in green steel mills at its South Wales facility.
The steelmaker expressed concern about the current level of aid and criticized the recent budget as a missed opportunity to show commitment to the industry.
Officers are in talks with Tata Steel and British Steel, the only blast furnace operators in the UK, to provide each company £300m to boost investment in cleantech.
One of the furnaces at Port Talbot will be closed over the next few years, leaving Tata Steel will have to decide whether to extend its lifespan, close or replace it with an electric arc furnace.
Without new technology, permanent closures could result in the loss of thousands of jobs and further damage to UK industry.
Costs for Energy has long been a concern for industries such as steel mills, and the government has promised to cut such costs with a "supercharger" scheme, although it won't be implemented for at least a year.
A spokesman for the Ministry of Business and Trade told ELN : "We provide extensive support to our vital steel industry on energy costs, fair government procurement and protecting the sector from unfair trade.
"Our recently announced British Industry Supercharger reduces energy costs for steelmakers by ensuring that they will be in line with other major world economies. And our recent reform of trade remedies has been welcomed by the entire industry, including UK Steel, who have called them “extremely important.”
“This shows that we are listening to what the UK steel industry needs to maintain stability and supporting jobs across the country.”