Tata Steel, Europe's second-largest steel producer, has been awarded a new contract to supply the UK's Network Rail with over 95 per cent of its rails for at least five years.
The firm, which has been struggling to produce steel profitably in the UK due to declining demand and high production, labour and logistics costs, said yesterday it could supply over 1 million tonnes of rails under the contract.
The Scunthorpe plant of the company, producer of steel for construction and infrastructure, is the current supplier to Network Rail.
The future of the plant would have been affected in event of non-renewal of contract.
Reuters quoted Chris Houlden, manager at metals, mining and fertiliser specialists CRU Research as saying Rail had been one of the more dynamic sectors in the global long products market which was obviously good news for Tata in a European finished steel market that remained very challenging overall.
The agreement would see the steel maker supply around 140,000 tonnes of rail each year under the agreement, which also includes suppliers ArcelorMittal and VoestAlpine.
The framework contract, featuring an option to extend for a further five years, would include orders for CEN60 and CEN 56 rail types, conductor rail and old-style bullhead, according to Network Rail.
According to Patrick Butcher, Network Rail's group finance director, Network Rail was renewing and enhancing more and more of the UK's railway over the next five years and it was crucial that there was a trusted and secure supply chain in place to help it achieve that safely and efficiently, Global Rail News reported.
The control period 5 would see, Network Rail complete £10 billion of core renewals and £10 billion of enhancements.
Henrik Adam, chief commercial officer of Tata Steel, said he was delighted the rail network in the UK would continue to be made and maintained with Tata Steel's participation.