Sheffield Forgemasters has withdrawn its bid for £36 million of Government cash on offer to replace the £80m loan cancelled amid controversy in 2010.
The Brightside Lane company had applied for the smaller sum from the Regional Growth Fund to invest in new plant and equipment for the melt shop, forge and machine shops.
But Graham Honeyman, chief executive at Sheffield Forgemasters, said: “I can confirm that Sheffield Forgemasters has withdrawn its current application for RGF funding from the Government.
“The company will continue its present programme of investments in plant, research and technology, using funds provided by government sources such as the Technology Strategy Board and by reinvesting all its own trading profits – a strategy which has seen more than £50m put back into the company since 2005.
“This investment approach reduces the priority of larger capital investment projects at this time, but leaves the way open to return to them in the future as the global economy continues to strengthen and market opportunities develop.
“While we are withdrawing our current application, I would like to record our appreciation of the RGF concept and the support provided by Nick Clegg.”
A spokesman for the Government said: “The Government also stands ready, should Sheffield Forgemasters wish to make a bid into future rounds of the RGF.”
Cancellation of the original £80m loan, pledged by the last Labour Government to build a press to make parts for the nuclear industry, led to heavy criticism of Mr Clegg but the Deputy Prime Minister said the money was never there to fund it.
After Forgemasters’ decision not to apply for the £36m sum, a spokesman for Sheffield Hallam MP Nick Clegg said: “This is a decision which has been made solely by Sheffield Forgemasters.
“They are a fine company and a vital part of our city’s economy but they know what is best for their company in both the short and long run.”