Co-Steel Sheerness, the Kent steel mill put up for sale by its Canadian owners in April, may be sold to a management buyout.
Sources close to the mill said works director John Clayton and personnel director Hugh Billot have been seeking funds from venture capital companies. Neither was prepared to comment on the deal.
US investment bank Merrill Lynch, which is handling the sale, last week issued a prospectus to potential buyers.
Interested parties are expected to submit their bids over the next two weeks.
Potential bidders include Ispat, the international steel group, Belgian steel group Bekaert, UK-based Caparo and an unidentified Italian steel group.