Liberty Steel says it would be interested in buying British Steel if talks with Chinese firm fail

However, a Government spokesman said the deal with Jingye to buy British Steel, which includes a large plant in Scunthorpe, remains on track.

In November, last year, the Government announced that the liquidators for the steel business had entered into a contract with Jingye.

The planned deal would include the Scunthorpe steelworks, where steel has been made for 150 years, as well as rolling facilities at Skinningrove Steelworks in Teesside and Hayange, France.

A Liberty Steel spokesman said: “We have made it clear to the official receiver that we would be interested in buying British Steel in the event that the process with Jingye is discontinued. We believe we have a viable plan to make the business sustainable.”

A report in the Sunday Telegraph stated that the French government had signalled a readiness to block a rescue by Jingye over fears about Chinese ownership of its French business.

A Department for Business, Energy & Industrial Strategy said: “The official receiver is responsible for running an independent sale process. Like any sale of this nature, there are a number of regulatory steps that need to be taken over the coming weeks before the sale can complete.

"The deal with Jingye is very much on track and we expect that the transaction will complete in the coming weeks."

The 37th biggest steel company in the world, Jingye is the 19th largest in China, according to the World Steel Association’s list of top steelmakers in 2018, producing over 11m tonnes of steel.

It said funding will be used to upgrade plants and machinery, as well as improve its environmental performance and efficiency.

The prospective buyer will be the Scunthorpe plant’s third owner in nearly four years. It has said it is “committed to preserving UK jobs” and investing in the British Steel’s workforce.