Germany's second-largest steelmaker Salzgitter on Wednesday said it was not in talks with larger rival Thyssenkrupp about consolidation, pouring cold water on hopes for the creation of a national metals giant.

Salzgitter said it has been successfully independent for more than two decades, but added that it remained open to ideas about what cooperation with peers could look like, provided it was beneficial for its future.

Thyssenkrupp earlier this week said it was talking to peers about consolidation in the steel industry, fuelling hopes for tie-ups in Germany or Europe. A combination with Salzgitter has long been considered one of the most likely options.

"However, there are no negotiations between the companies," Salzgitter said in a statement.

Sources told Reuters that Thyssenkrupp was holding talks with Sweden's SSAB, China's Baoshan Iron & Steel and India's Tata Steel, with which the German conglomerate wanted to form a joint venture last year.

The fact that Thyssenkrupp might even sell a majority of its steel unit has drawn opposition from workers, including Germany's top labour union IG Metall, who have substantial influence at the group and hold half of the seats on its supervisory board.

"There is no scenario I can imagine that would see IG Metall and the group's labour representation approve the sale of a majority of Thyssenkrupp Steel," Tekin Nasikkol, who heads the works council of Thyssenkrupp Steel Europe, said.

"To be very clear: I fully reject a minority shareholding. It's a red line," he told German daily newspaper Westdeutsche Allgemeine Zeitung.

Nasikkol said workers would prefer a German steel alliance, but only under the leadership of Thyssenkrupp.

(Reporting by Tom Kaeckenhoff, Christoph Steitz and Arno Schuetze; Editing by Michelle Martin and Maria Sheahan)