Accounts for UK Export Finance (UKEF), which lends money to companies planning to buy products from British exporters, show that it gave £82.8m in “buyer’s credit” to Lebedinsky GOK, which mines iron ore, a key element in steel production.

Lebedinsky is part of metals and mining company Metalloinvest, which is owned by the Uzbek-born tycoon Alisher Usmanov, who has a stake in Arsenal.

UKEF’s support for Lebedinsky helped finance a contract with Midrex UK, a subsidiary of US company Midrex Technologies, which is owned by Japan’s Kobe Steel.

Midrex Technologies says it set up a UK office to take advantage of the taxpayer-backed UKEF scheme. The company’s website says Midrex UK was “specifically established in the heart of one of the world’s financial hubs to provide our customers with access to valuable project financing”.

Gareth Stace, the director of UK Steel, said: “The UK steel sector has been in the deepest crisis for more than a generation in the past 12 months for two key reasons: higher costs resulting from punitive government policy and the massive rise in dumping of steel from countries such as Russia.

“Learning that government money is being pumped directly into the Russian steel sector beggars belief and actively goes against everything we have been calling on the UK government to do, to ensure that the UK steel sector can compete on a fair and level playing field.”