The British billionaire leading the group set to buy Australian steel maker and mining group Arrium has floated a radical suggestion on how to generate power using empty mines.

Sanjeev Gupta said empty mine pits could be flooded with water, which could then be used to generate electricity.

Sanjeev Gupta, executive chairman of the GFG Alliance.

"One great opportunity for Whyalla in particular is pumped storage, because the mine pits which are now empty can be used to store water. And that can be used to generate energy when there is a lack of energy," he said, in an interview with ABC radio on Thursday.

He also expressed an interest in making investments in renewable energy in Australia, via the group's energy division.