The Ministry of Defence is in talks about taking over one of Britain’s oldest steelmakers to protect the supply chain of the nuclear submarine fleet.
Steel industry sources told Sky News the department had drafted in accountants Deloitte to advise it on negotiations with privately owned Sheffield Forgemasters, which dates back to the 1750s and is understood to make parts for Trident-armed subs.
Insiders said a takeover was only one option being considered and a final decision was unlikely to be reached for many months.
However, if it goes ahead, the deal would reflect the Government’s growing willingness to own assets of significance to national security.
Ministers have moved recently to take over the Atomic Weapons Establishment, another crucial part of the nuclear weapons programme, by ending a deal with private-sector contractors such as Serco, the outsourcing giant.
Meanwhile, the National Security and Investment Bill lists more than a dozen sectors where foreign ownership will need mandatory notification.
In 2015, ministers blocked a state-owned Chinese firm’s offer to rescue the south Yorkshire-based company, whose finances have been under pressure from lower global steel prices due to weak demand. In October, it announced it would cut a tenth of its workforce due to the pandemic’s impact on industries such as oil and gas.
An MoD spokesman said: "Sheffield Forgemasters is a strategic supplier to our programme and therefore we are in regular dialogue with them. It would be inappropriate to comment further due to commercial sensitivities."
David Bond, a former executive at BAE Systems who runs the firm, said: "Our long-term relationship with UK Defence prime contractors and the MoD is based on the critical work we do within the submarine programme and we will not comment on matters regarding our defence work."
The group’s latest accounts from August show it won £66m of new contracts over the year, mainly defence orders, which it claimed would provide its core revenues until 2022.
How a takeover would be structured and whether taxpayers would foot the bill remain unclear.
Government grants and loans to Sheffield Forgemasters have put the company under the spotlight before, including when linked to Nick Clegg, then MP for Sheffield Hallam, and David Cameron.