New Zealand’s government and BlueScope Steel Ltd.’s local unit will spend NZ$300 million ($188 million) to upgrade a mill near Auckland in what they said was the nation’s largest emissions-reduction project.

Under the plan, the government will provide up to NZ$140 million and New Zealand Steel NZ$160 million to replace the Glenbrook steel plant’s oxygen furnace with an electric arc furnace and two of four coal-fueled kilns, according to statements Sunday. That will halve the coal used at the site.

“This project dwarfs anything we have done to date,” Prime Minister Chris Hipkins said. “It will eliminate 1% of the country’s total annual emissions.”

NZ Steel Chief Executive Robin Davies said Glenbrook’s carbon footprint would drop by 800,000 tons — equivalent to taking around 300,000 cars off the road.

New Zealand’s performance in tackling global warming has been mixed, with Climate Action Tracker classifying the nation’s policies as “highly insufficient” to meet its Paris Agreement targets. The Climate Change Performance Index, a monitoring tool produced by a consortium of German nonprofits, ranks New Zealand 33rd in the world on climate action, or “medium-performing.”

Sunday’s announcement is estimated to meet more than 5% of the nation’s required emissions reductions between 2026 and 2030.

New Zealand will hold an election in October and Hipkins’ Labour Party is vying with the opposition National Party in what’s expected to be a tight race.

Hipkins, aiming to secure the future of domestic steelmaking with the deal, said it means businesses will have access to locally produced, cleaner steel “and high value jobs are protected that otherwise might have gone offshore.”

BlueScope Chief Executive Officer Mark Vassella concurred. “This model will make New Zealand as close to self-sufficient as possible using renewable energy to recycle domestic scrap steel, rather than shipping it offshore.”