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Sanjeev Gupta’s Liberty Steel is to cut production and idle some of its smaller plants across the UK in a sweeping restructuring that could lead to the axing of more than 400 jobs.

The company, which is part of Gupta’s GFG Alliance conglomerate, said that it would focus on its “high value alloy steel production” at Rotherham, Stockbridge and Brinsworth in Yorkshire.

Production at Rotherham’s electric arc furnace will be reduced and replaced with imports from abroad. High energy costs were making the production of commodity grade products uncompetitive, the company said.

Operations in West Bromwich will be idled, with its steelmaking activities at Newport in south Wales to be mothballed and the site turned into a storage, distribution and trading hub.

The actions, which Liberty blamed on “severe competitiveness issues”, “may potentially impact up to 440 roles across the business”, the company said in a statement on Thursday.

The cuts are the latest to hit the struggling industry, which has warned about its future amid soaring energy costs.

Alun Davies, Community steelworkers’ union national officer, said the news was a “body blow to Liberty Steel’s loyal UK workforce, who couldn’t have done more to get the company through an exceptionally challenging period”.

Jonathan Reynolds, Labour’s shadow business secretary, said the news was “devastating” for steelworkers and their communities.

“Endless sticking plasters from the Conservatives have left our UK steel sector on the brink,” he said.

Separately, UK chancellor Jeremy Hunt is considering a taxpayer rescue of two blast furnaces owned by British Steel. Under the proposal the government would subsidise the Chinese-owned company £300mn to keep the furnaces open.