Liberty Steel, part of the GFG Alliance, acquired the Dudelange site in 2018 after ArcelorMittal put the works up for sale as part of a deal to acquire Italy’s Ilva steel.

But the new owner is facing financial difficulty after a main source of financing has dried up. Greensill allowed companies to borrow money to pay their bills with suppliers, but it lost backing from its insurers and Credit Suisse froze funds after Greensill was unable to repay a $140m loan.

The FT reported that Greensill had about $5bn of exposure to GFG Alliance companies prompting fears of the group’s collapse if it was forced to make repayments. A US private equity group, Apollo, is reportedly interested in buying part of Greensill but wouldn’t take on any GFG financing.

Liberty Steel owner Sanjeev Gupta told UK trade unions on Tuesday that the company had “adequate funding” for its current needs and is making progress on securing alternative long-term funding, a source told Reuters.

Court documents filed by Greensill had claimed GFG was in financial difficulty and had started to default on its obligations, adding to Greensill’s woes.

GFG employs 35,000 people worldwide, including 3,000 steelworkers in the UK. The Dudelange site employs around 300 people. Together with a plant in nearby Liège, Belgium, it was promised a €100m investment following the takeover by Liberty Steel.

The Luxembourg steel mill was temporarily closed during the pandemic last year causing delivery delays for the manufacturer.

French finance minister Bruno Le Maire told broadcast France 2 on Tuesday that the French government would stand by the Hayange and Ascoval plants owned by Liberty Steel should they face difficulties from the financial fallout.

The Luxembourg government and trade unions have yet to comment on the matter.