Foreign steel to be used for nearly a fifth of British railway upgrades
Foreign steel will account for almost a fifth of Britain's future railway upgrades following a 'landmark' government contract.
Ministers said on Tuesday that British Steel had been handed a £500 million contract to make new rails for Network Rail.
Transport Secretary Heidi Alexander said: 'This landmark contract truly transforms the outlook for British Steel and its dedicated workforce in Scunthorpe, building on its decades-long partnership with Network Rail to produce rail for Britain's railways.'
Under the new deal just over 80 per cent of Network Rail's supply will now come from the UK.
From July, the remaining steel for rails will be sold to Britain by two Austrian and German companies, Voestalpine and Saarstahl.
Network Rail said that in 2019 '95 per cent' of its rails were made in Britain. By April this year that figure had fallen to around 80 per cent.
Under the Labour Government's newly unveiled plans, British Steel will only supply 377,000 of the 450,000 tonnes of rails being bought over the next five years.
Business Secretary Jonathan Reynolds said: 'This is great news for British Steel and a vote of confidence in the UK's expertise in steelmaking, which will support thousands of skilled jobs for years to come.'
Network Rail commercial director Clive Berrington added: '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 and will remain our main supplier in the years ahead.'
The Labour Government nationalised the Scunthorpe steelworks in April at a cost to the taxpayer of £100 million, taking control after Chinese former owner Jingye threatened to shut down the site's blast furnaces.
Around 2,700 jobs were at risk of redundancy until the Government stepped in with emergency legislation that was voted through Parliament on a Saturday.
Jingye said in March that British Steel was losing £700,000 a day, with Zengwei An, its then-chief executive, saying at the time that the shutdown 'is a necessary decision given the hugely challenging circumstances the business faces.'
In a statement, the company added that the Scunthorpe site was 'no longer financially sustainable due to highly challenging market conditions, the imposition of tariffs, and higher environmental costs relating to the production of high-carbon steel.'
Scunthorpe is the only place in Britain capable of making so-called 'virgin steel', high purity metal refined from raw materials.
Under net zero plans embraced by both Labour and the Conservatives, politicians had been urging steelmakers to concentrate on 'green steel', which is made by melting recycled steel items in electric-arc furnaces. Such green steel contains impurities that make it weaker than proper virgin steel.
In the 2000s Scunthorpe was given substantial upgrades to allow it to produce rails in 216-metre lengths, Modern Railways magazine reported. Nowhere else in the country is capable of doing so, meaning the site is vital for Network Rail's future.
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