Sheffield steel: Government issues statement amid calls to rescue Liberty Speciality Steel

The Department for Business and Trade said it continued to “closely monitor” deverlopments around Liberty Steel.

It added: “It is ultimately 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.”

The announcement will disappoint 1,500 workers at Liberty Speciality Steel UK at plants in Rotherham and Stocksbridge.

Last month, the government took control of British Steel's Chinese-owned plant in Scunthorpe to prevent it from closing.

At the time, industry minister Sarah Jones said the costs would come from an existing £2.5bn fund for steel.

There are fears for the future of Liberty Speciality Steel UK after a recovery plan was ditched a day before it was due to be decided in court.

Bosses at the firm - which employs 1,500 in Rotherham and Stocksbridge - announced they would “quickly consider alternative options,” after withdrawing a plan they had been working on for six months.

The firm has debts of £618m, according to court documents.

A Liberty Steel spokesperson said: “Discussions continue with creditors and Liberty remains committed to doing all it can to maintain the Speciality Steel business.”

A steelworker, who asked not to be named, said: “It's a really worrying time for us as it looks like we could collapse any moment. We haven't produced fully in a couple of years and the non-payment of pension money is horrific.

“It will seriously hurt the country if we go under. The government wants green steel using electric arc furnaces. We have two at Rotherham sat doing nothing thanks to Liberty.”

Marie Tidball, Labour MP for Penistone and Stocksbridge, said she had been fighting for steel “since day one.”

She added: “I understand that this time will be causing worry and uncertainty for steelworkers and their families in Stocksbridge. I have continued to speak closely to our steelworkers on the ground in Stocksbridge, Community Union, Liberty and the Government over the last few days.

“I am encouraging all sides to come to the table and look at all options to secure the future of Stocksbridge Speciality Steel site. I am speaking to senior managers at Liberty frequently, including to ensure wages and pensions for steelworkers continue to be paid.

“The Government has committed £2.5 billion to secure the UK steel industry, and has always been clear that there is a bright future for steel in the UK.

“The Government will do everything they can to get it right for our British steel industry, including a commitment to using our steel assets productively. This must include Stocksbridge.

“Our local plant has a strategically significant, highly specialist capability to produce world-leading steel, which is crucial to our national defence, aerospace, and energy industries.

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“Our steelworks has been the beating heart of our community for nearly 200 years, and I will continue to fight to protect our site, our jobs, and the strategic capability our site can offer.”

Community union general secretary Roy Rickhuss CBE said: "This is a deeply concerning time for our members and Liberty Steel employees across Britain - a dedicated workforce which has already endured far too much turbulence and uncertainty over recent years.

"Liberty’s plants are strategically important assets for the UK steel industry and the country as a whole.

“At this critical juncture, all stakeholders need to work together to find a long-term solution. We are therefore calling on the company and the government to get round the table with us and discuss all options to secure our members' jobs and the future of the business."