Industrialist Sanjeev Gupta is working on a sensational rescue bid for British Steel after being encouraged to step in by Ministers who want to seal a deal within weeks, The Mail on Sunday can reveal.
Gupta's company, Liberty Steel, is understood to be among a handful of serious potential suitors to have expressed an interest in the company which collapsed into liquidation last month putting up to 25,000 jobs at risk.
Gupta, 47 - previously dubbed the 'Saviour of Steel' for his belief and financial backing of an industry that many believe is beyond rescue in the UK - has not formally made a bid.
But The Mail on Sunday understands Liberty is interested and sees Scunthorpe as an exciting proposition. Gupta is understood to have been approached by Ministers, British Steel bankers and unions who see Liberty as the best potential buyer.
The Indian-born British tycoon's radical vision for the company would effectively transform its Scunthorpe plant into a giant steel recycling centre.
Gupta, who has been praised by Prince Charles for his efforts to rejuvenate British industry, would switch off its decades-old blast furnace and replace it with an electric arc furnace to focus on turning recycled steel into sellable metal.
The switch may cause job concerns because electric arc furnaces, which process recycled scrap, are less labour-intensive than traditional blast furnaces, which create steel from iron ore. But supporters of the more environmentally friendly process are confident a greater number of jobs can be created in the supply chain.
Dozens of companies have signed non-disclosure agreements with the Insolvency Service, which is handling the sale process along with professional services firm EY. But sources said only a handful - including Liberty - are considering purchasing British Steel's assets in their entirety.
Those companies are now poring over British Steel's confidential financial figures, including sales information. They have access to a secure database as they conduct due diligence. Bids are not expected until late this week at the earliest, although the Government is keen to agree a deal within weeks.
British Steel, which has 5,000 workers and is estimated to support 20,000 further jobs in the supply chain, collapsed into liquidation after Greybull Capital, its private equity owners of three years, failed to secure new funding from the Government.
Greybull, which was charging British Steel £3million a year in management costs, had already secured a £120million loan from the Government to cover an EU bill relating to carbon emissions.
It has been criticised for the way it managed British Steel and the Government is paying close attention to the sale process.
In addition to Liberty, other firms rumoured to be in the sale process - but as yet unconfirmed as interested parties - include China's Hesteel and UK private equity group Endless.
One industry source said any potential buyer would need Government support - a loan or guarantee - before taking on the plant. Gupta, who was born in Punjab and schooled in England, is the multi-millionaire boss of GFG (Gupta Family Group) Alliance, which owns Liberty Steel and other companies operating across financial services and land ownership.
In an interview with The Mail on Sunday in April, Gupta spoke of his belief in a steel model in which scrap from old cars and other sources is recycled and used to make new products. Liberty's UK headquarters in Rotherham, South Yorkshire, operates an electric arc furnace and makes products including material for Boeing planes.
Recycled - or 'green' - steelmaking is usually associated with lower quality products. But Cambridge engineering and environment Professor Julian Allwood, who recently published a report setting out how green steelmaking can thrive in the UK, said this need not be the case.
Speaking to The Mail on Sunday about his paper - commissioned by the Greensteel Council, which is sponsored by Liberty - Allwood predicted that the UK's two remaining blast furnaces, in Scunthorpe and Port Talbot, would close soon.
'It's a certainty,' he said. 'But there's a strategic opportunity for us to become the world leader in recycled steel, which would suit us because we're a mature economy with a big stock of steel that we know is going to come.'
Allwood admitted recycled steelmaking supports fewer direct jobs, but said the process could create more positions in the supply chain - both in scrap processing and sales.
'There's a big opportunity for us to rejuvenate the supply chain,' he said, adding that green steel is better for the environment. Scrap will not need to be imported, unlike the iron ore needed to make steel from scratch.
He also speculated that a reborn British Steel in Scunthorpe could have its own wind farms in the North Sea to save on costs.
GFG Alliance now has a UK workforce of around 5,000 and owns numerous steel assets in the UK.
However, sceptics have raised concerns about the structure of Gupta's empire and questions have been raised about financiers' confidence in the firm. In April, Gupta admitted he had come under pressure to simplify and consolidate the group.
The Government declined to comment, but Ministers are understood to have encouraged any interested parties to come forward.
Source: This is Money