A second UK steel company could be rescued by the government, with Business Secretary Jonathan Reynolds leaving the door open to taking full control of Speciality Steel UK if its parent company, Liberty Steel collapses.
The story was first reported by the Guardian on Friday morning.
Liberty Steel, owned by Sanjeev Gupta, has struggled with financial difficulties since the collapse of its lender, Greensill Capital.
Speciality Steel UK (SSUK), which operates plants in Rotherham and Sheffield, has left the former site idle for a year due to funding issues, despite housing the UK’s largest electric arc furnace.
The government took control of British Steel in April, though it continues to be owned by China's Jingye. Full nationalisation was said to still be a possibility after Jingye had declined government support to keep its Scunthorpe plant running and failed to stockpile enough raw materials.
On Friday, a government spokesperson said: "We continue to closely monitor developments around Liberty Steel, including any public hearings, which are a matter for the company.
"It is for Liberty to manage commercial decisions on the future of its companies, and we hope it succeeds with its plans to continue on a sustainable basis."
A Liberty spokesperson said SSUK "remains a valuable business with the right assets and skills. There is strong demand for the kind of steel we produce, especially in aerospace, defence and energy."
The government "will need to step in to protect jobs and the strategically important assets," a spokesman for the Community union said, if Liberty collapses.
Liberty announced a restructuring plan for SSUK last November, with the aim of alleviating the company’s debt burden and positioning it for future growth.
Liberty, part of Sanjeev Gupta’s GFG Alliance, was hit by the collapse of principal backer Greensill, leading in last March to a framework agreement being signed with its major creditors to consolidate its UK steel businesses under a new entity.