The British investor Michael Flacks is reportedly “very” interested in buying British Steel and combining it with another plant in Italy, in a deal that would create one of Europe’s largest metals groups.

The businessman’s Miami-based investment group, Flacks Group, which specialises in buying distressed companies, is working with bankers to prepare a bid for government-controlled Scunthorpe steelworks, the Financial Times reported.

“Somebody has to take control of British Steel. It’s a plant of national importance,” he told the FT. “I see an amazing opportunity where most people have overlooked this sector. I’m a big, bullish believer.”

Flacks’s approach would mark the latest attempt to transform the loss-making manufacturer, which employs 3,500 people at its plant in Scunthorpe, into a viable business.

The private equity group Greybull Capital bought British Steel in 2016 but it collapsed into insolvency three years later. China’s Jingye Steel then bought it in early 2020, but the government stepped in last year with emergency legislation to take over management of the steelworks amid fears that its owner was planning to walk away.

British Steel and other producers have been hit by a global glut of steel from China that has driven down prices. Over the past three decades the country has transformed from a minor player to the world’s largest producer, making more than half of global output in 2024.

Officials have sought to increase British Steel’s output to improve profitability, after Jingye said the Scunthorpe operation was losing £700,000 a day when it announced plans to close the site in March. Any new owner would need to invest hundreds of millions of pounds to install new electric arc furnaces to replace the polluting blast furnaces.

Flacks Group is already in talks to buy the former Ilva steelworks in southern Italy, and said late last year that it was lining up €5bn (£4.3bn) of financing to turn the business around. Flacks is reported to be considering combining the two producers, seeking to capitalise on a growing preference from European companies and governments for local suppliers.

“My vision is we’re going to do a roll-up of European steel operations,” Flacks said. “There’s going to be an infrastructure growth. People are going to be more receptive to working with British Steel because it won’t be in Chinese hands.”

Flacks’s interest in Scunthorpe came as a surprise to some in the industry. One source said it was unclear whether there would be any significant business advantages in combining the operation with Ilva. “It’s two sites that need massive investment,” they said.

The Italian steelworks is the largest in Europe but has been beset by problems, including a protracted scandal over high levels of pollution. Studies of residents of the Apulian city of Taranto have linked emissions from the plant to increased rates of cancer.

Flacks, who has a background in the retail industry, is estimated to be worth nearly £1.7bn, according to the Sunday Times Rich List, and has investments in industry and property.

In 2019, Flacks made a £20m attempt to buy the retailer Laura Ashley, having explored a takeover of the discount chain Poundworld the previous year. Both companies eventually fell into administration.

Flacks told the FT he would buy British Steel with the aim of being a long-term owner of the Scunthorpe site. “Every deal I do is complicated,” he said. “We’re not private equity, we’re not a listed company, we don’t have shareholders to answer to. We’re in it for the long game.”

Flacks declined to comment. British Steel was approached for comment.

A government spokesperson said: “Last year we stepped in to save British Steel from collapse, protecting thousands of jobs in the process. Discussions with Jingye over the long-term future of the site are ongoing and no conclusion or decision has yet been reached.

“We will ensure a bright and sustainable future for steel making and steel jobs in the UK and publish our steel strategy in the coming months.”