A £50m cash injection will enable Liberty Steel to restart production in Rotherham, saving hundreds of jobs.

The investment is part of a wider restructuring of Liberty’s owner, GFG Alliance, also involving Liberty Primary Metals Australia.

GFG was forced to seek new funding when its key lender, Greensill Capital, collapsed.

The plant in Rotherham has been closed since the spring.

Jeffrey S Stein, chief restructuring officer, said the development “gives the business clarity and stability”.

Jeffrey Kabel, chief transformation officer, said the £50m would “ensure that Liberty has the ability to raise and deploy capital quickly in the UK”.

While GFG’s executive chairman, Sanjeev Gupta, thanked government, union representatives, customers, suppliers, and the community in Rotherham for the support they had provided “as we managed our way through the challenges created by the Greensill collapse”.

Roy Rickhuss, general secretary of the Community union, said the announcement was “overdue but an important step in the right direction”.

He added: “The government must play their part and act now to protect our industry from the consequences of soaring energy prices.”

Local MP and Labour’s shadow defence secretary, John Healey, said that while it was a “breakthrough” following months of uncertainty, the £50m “won’t be enough for long”.

He added: “So full, long-term refinancing for Liberty UK now needs to follow rapidly. Only then will Rotherham breathe more easily.”

Rotherham MP Sarah Champion tweeted that it was “hugely welcomed news”, adding: “Now the government needs to play its part and commit to use British steel in its infrastructure projects and address the high business rates and energy costs.”