Australia’s government is coming under mounting pressure to spell out contingency plans if industrialist Sanjeev Gupta is unable to secure emergency financing to save metals operations that employ thousands.

The announcement from the UK’s Serious Fraud Office on Friday that it has launched a probe into GFG Alliance, Gupta’s sprawling conglomerate, over suspected fraud and money laundering, has deepened fears among thousands of Australian steelworkers who had hoped a rescue deal was close.

The industrialist’s main Australian assets are a steelworks in the South Australian city of Whyalla and a coking coal mine in Tahmoor.

Rex Patrick, a senator for South Australia, said the revelations of the SFO probe “cast a seriously thick cloud over whether the group will be able to secure and retain financing”.

“Australia must not, under any circumstances, see this sovereign steelmaking capability disappear. It is of manufacturing, national resilience and national security significance,” he added.

Gupta’s empire has been trying to secure new financing since March when Greensill Capital, its main lender, collapsed into administration.

Hours after the SFO disclosed its probe, White Oak Global Advisors, a San Francisco-based private finance firm that had been in talks to provide loans to GFG’s Australian and UK steelworks, said it could no longer continue the talks.

It then appeared to row back on those remarks in a further statement that it remained in talks to refinance the Australian steelworks. The talks are continuing, people familiar with the matter said on Sunday. White Oak declined to comment.

GFG has denied wrongdoing and pledged to “co-operate fully” with the SFO probe.

Eddie Hughes, a former steelworker and now an MP in South Australia, said that while there was underlying confidence in the viability of the Whyalla plant, it would be irresponsible if the state and federal governments were not putting in place contingency plans to ensure GFG’s Australian businesses could continue if a funding deal did not progress.

He said it was important that GFG’s different Australian businesses, which include the Whyalla steelworks, iron ore mines and Infrabuild, a steel manufacturing and recycling division, are not split up and sold off separately in the event GFG collapses.

“The steelworks would be vulnerable in the event of a break-up and there may be a role for government to ensure that doesn’t happen,” said Hughes.

Credit Suisse is seeking the wind-up of Whyalla’s steelworks to recoup losses on invoices, which Greensill packaged into bonds and the Swiss bank sold to its customers.

Australia’s federal government and the South Australian state government, which are both led by the Liberal party, have so far ruled out intervening to support Gupta’s operations.

“We are not going to get into hypotheticals. I think there has been speculation in the UK about nationalising private businesses. But this is certainly not something that the South Australian government is contemplating,” Rob Lucas, South Australian treasurer, told the Financial Times.

The government is monitoring the available information with relation to the fraud investigation in the UK, he added.

A spokesperson for the minister of industry said the situation was being monitored.

In the UK, where Gupta’s steel plants employ about 3,000 people, the British steelworkers’ union Community described news of the SFO investigation as a “concerning development” and urged that it should not “detract from the complete focus of all parties on securing our members’ jobs and protecting these crucial strategic businesses”.