Liberty Steel has asked the Government for £170 million in financial support, it has emerged.
The company has told the Government support was needed to pay operating expenses and deal with recent losses.
Concerns over the future of the company have been expressed after financial backer, Greensill Capital, went bust.
Liberty Steel employs around 5,000 workers at a number of sites across the UK, including around 100 at a plant in All Saints Road, Wednesbury.
A Government spokesman said: “The Government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.
“The Government has supported the steel sector extensively, including providing over £500 million in recent years to help with the costs of energy.
“Our unprecedented package of Covid support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”
It is understood that ministers have concerns about the structure of the company and whether any bailout would remain in the UK.
The Government has said steel companies can access a number of schemes including the Coronavirus Job Retention Scheme, where employers can apply for a grant of 80% of workers’ salaries up to £2,500 a month and deferral of the next quarter of VAT payments for firms, until the end of June.
Shadow business minister Lucy Powell said: “Labour has called for a plan B for Liberty Steel. It’s in our national interest to safeguard jobs and domestic steel-making capacity.
“The ball is now in the Government’s court. Ministers must put aside ideology and keep all options on the table, to ensure the best value for money option and the long-term future of these plants.”