Network Rail signs huge rail supply contract with British Steel

A major five-year contract worth £500 million between Network Rail and British Steel has been signed, securing more than 337,000 tonnes of rail track supply and safeguarding thousands of UK manufacturing jobs.

The deal will be announced by Transport Secretary Heidi Alexander during a visit to British Steel’s Scunthorpe plant. It is the first major public procurement following the government’s intervention in March that ensured the site remained open.

Starting 1 July, the contract will supply Network Rail with approximately 80% of its total rail needs over the next five years. It forms part of a wider £2.5 billion Government-led initiative to modernise and sustain UK steel production. While British Steel will provide the bulk of the rail – at least 337,000 tonnes – additional contracts are expected to be awarded shortly to European firms for up to 90,000 tonnes of specialist rail products.

“This landmark contract truly transforms the outlook for British Steel and its dedicated workforce in Scunthorpe,” said Alexander. “We’ve now helped secure their long-term future by backing British Steel with meaningful Government contracts, protecting thousands of skilled manufacturing jobs in the process.”

The Scunthorpe steelworks, has a heritage of producing rail since 1865, had been under threat after British Steel’s Chinese owners, Jingye Group, announced plans to shutter the site’s blast furnaces. The Government responded with emergency legislation, passed during a rare recall of Parliament, to avert the closure.

The Scunthorpe steelworks produce 95% of Network Rail’s rail supply with the company saying at the time of the closure threat that it had enough steel supply for six months if the steelworks had shut. In that time, it also signed flexible deals with European suppliers Saarstahl and Voestalpine.

But the new deal ensures that its rail supply will stay within the U.K, which Business Secretary Jonathan Reynolds has called “a vote of confidence in the UK’s expertise in steelmaking”.

He added: “Following our decisive action to step in and save steelmaking at Scunthorpe in April, this contract will give the sector the security to supply the steel we need for the infrastructure of the future, as part of our Plan for Change.”

Network Rail’s Group Director for Railway Business Services, Clive Berrington, reaffirmed the company’s commitment to domestic suppliers, saying: “We are committed to buying British where it makes economic sense to do so, and British Steel remain extremely competitive in the provision of rail.”

where it makes economic sense to do so, and British Steel remain extremely competitive in the provision of rail.”

British Steel’s Commercial Director for Rail, Craig Harvey, called the contract “a huge vote of confidence in UK workers and British industry,” highlighting the importance of the deal in maintaining safe and reliable rail journeys for millions of passengers and freight operators.