The Morrison government has raised the prospect of providing finance to a South Australian steelworks where thousands of jobs are on the line, with the billionaire owner facing legal action.
Citibank, acting on behalf of Credit Suisse, is taking Sanjeev Gupta to court in an attempt to wind up two of his operations - OneSteel Manufacturing and Tahmoor Coal.
If successful, the move could trigger the appointment of liquidators to the Whyalla steelworks and its associated mines, which employ more than 1800 South Australians, and to the Tahmoor coal mine in NSW.
Finance Minister Simon Birmingham moved to reassure the workforce, saying it was early days with the initial hearing not scheduled until May 6.
"Governments are monitoring this situation very closely and indeed doing the type of contingency thinking and planning that that would be prudent in these sorts of circumstances," he told ABC radio on Thursday.
Senator Birmingham - the most senior South Australian in the federal government - said financing options provided the last time the steelworks moved into administration were being considered.
"Our government continues just to make sure we are looking at those examples from the past and being mindful of how we could respond if we need to," he said.
It is the latest setback for Mr Gupta's global business after the collapse of major lender Greensill last month.
Credit Suisse is trying to recoup some of the money it is owed by breaking up Mr Gupta's Australian assets.
But his UK-based company, GFG Alliance, has vowed to vigorously defend the court action, saying it does not conduct any financing with Credit Suisse.
Premier Steven Marshall and Prime Minister Scott Morrison have discussed providing bridging finance to keep the steelworks afloat should creditors take control of GFG.
Senator Birmingham said Australia's sovereign capability to produce steel was one factor in the government's considerations.
"The Whyalla community should know that, that everybody is doing all the work they should be doing to make sure that that we maintain that steel making capability for Australia," he said.
He noted GFG was talking to alternative financiers and had expressed confidence the company could navigate the crisis without going into administration.
Australian Associated Press