LIBERTY Steel, whose plants include one in Newport and another in Tredegar, have had a request for £170m in financial support rejected by the UK Government.
This week the company told the government support is needed to pay operating expenses and deal with recent losses.
Concerns over the future of the company have been expressed after financial backer, Greensill Capital, went bust.
Liberty Steel employs around 5,000 workers at a number of sites across the UK. More than 130 people are employed at its Newport plant, and 50 in Tredegar.
The firm's founder Sanjeev Gupta, who also owns the Wyelands estate just outside of Chepstow, sent a letter last week to the government asking for help to pay day-to-day operating expenses and absorb recent losses.
A spokesman for Liberty’s GFG Alliance said: “GFG Alliance as a whole is operationally strong and we are benefiting from strong markets in steel, aluminium and iron ore.
“While Greensill’s difficulties have created a challenging situation, we have adequate funding for our current needs.
“Discussions to secure alternative long-term funding continue to make good progress and while this takes place we have asked all of our businesses to manage cash carefully.
“Combined with the efficiency drive we’ve implemented over the past year this has ensured that most of our major businesses generating positive cashflows.
“In the UK speciality steel business, where weakness in the aerospace market has cut demand for some products by 60%, we have been taking specific actions to stabilise the business and improve cash flow.
“Activities on the sites include reducing steel stocks, matching stock to customer orders, and working with customers to achieve terms that will bring in cash as early as possible.
“We are grateful for customers and suppliers support in this work which comes alongside our aim to secure additional working capital facilities to support the business and our use of the furlough scheme to support employees.
“We will continue to work closely with the unions and our employees to identify the most effective ways of supporting the business and preserving jobs.”
On Friday a UK Government spokesman said: “The Government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.
“The Government has supported the steel sector extensively, including providing over £500 million in recent years to help with the costs of energy.
“Our unprecedented package of Covid support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”
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It is understood that ministers have concerns about the structure of the company and whether any bailout would remain in the UK.
Shadow business minister Lucy Powell said: “Labour has called for a plan B for Liberty Steel. It’s in our national interest to safeguard jobs and domestic steel-making capacity.
“The ball is now in the government’s court. Ministers must put aside ideology and keep all options on the table, to ensure the best value for money option and the long-term future of these plants.”
Liberty Steel, which employs 30,000 people globally, is a key supplier to industries such as aerospace through its speciality steel operation.
On Saturday the government was urged to consider nationalising Liberty Steel in a bid to save jobs.
Unite’s assistant general secretary Steve Turner said steel was a foundation industry and was essential for the recovery of the UK economy from Covid-19.
“Unite is urging the Government to do everything that is necessary in order to preserve Liberty Steel and secure its long-term future," he said.
“This is key to protecting the jobs of its workforce and the communities where it is based, to safeguard its supply chain and ensure its customers receive the products they require.
“No option should be ruled out in protecting the long-term future of Liberty Steel, and that must include the option of nationalising the business."
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