The Australian government may provide finance to save the Whyalla steelworks owned by the British entrepreneur Sanjeev Gupta, whose business empire is facing a multibillion-dollar debt crisis.

About 1,200 jobs are directly at risk and another 3000 will go in SA in the ‘knock-on’ if the Whyalla mill closes.

Senator Birmingham said Australia’s sovereign capability to produce steel was one factor in the government considering bridging finance.

The problem for the Federal and SA Governments, is if GFG Alliance in the UK is wound up, his empire will crumble.

The Whyalla mill is profitable at the moment because of the high price of steel on global markets.

The outlook for Gupta’s Australian business deteriorated last week when Citibank, acting on behalf of Credit Suisse, took a subsidiary of his GFG Alliance group to court in NSW in an attempt to wind up OneSteel Manufacturing in Whyalla and Tahmoor Coal.

If successful, it could trigger the appointment of liquidators to the Whyalla steelworks.

Credit Suisse indirectly provided funding to Gupta’s empire through funds it ran for Greensill, a finance group headed by the former Bundaberg sugar farmer Lex Greensill.

The Swiss bank is trying to recoup some of the money it is owed by breaking up Gupta’s Australian assets.

It is believed to have exposure of about $4bn to the Gupta empire.

It is the second lawsuit Credit Suisse has launched against Gupta’s businesses since the Greensill collapse.

Last month it took legal action seeking to have Liberty Commodities, another of Gupta’s companies, wound up.

Whyalla produces about 30 per cent of Australia’s steel.