Amid ongoing uncertainty over the long-term future of the government-controlled steelworks in Scunthorpe, British Steel has secured an order worth tens of millions of pounds to supply rail for a high-speed electric train in Turkey.
The company announced that the site would supply 36,000 tonnes of rail to ERG International Group, calling it an “eight-figure deal”.
The train is intended for a 599km railway line being built to connect Turkey’s capital Ankara with the western port city of Izmir, cutting travel times and reducing carbon emissions.
British Steel said securing the contract would create 23 new roles at the north Lincolnshire site and restart round-the-clock train manufacturing for the first time in more than a decade.
The deal, backed by UK export finance, is seen as a commercial incentive for loss-making manufacturers.
However, questions remain over the long-term viability of the Scunthorpe site, where around 3,500 people work to transform iron ore into long steels needed for buildings, bridges and railways.
British Steel was bought by private equity group Grable Capital in 2016 but went bankrupt three years later. China’s Jingye Group bought it out of receivership in early 2020, but last year announced plans to close Scunthorpe Steelworks amid losses of £700,000 a day.
After Zinge refused support to buy raw materials, the UK government stepped in with emergency legislation to regulate the plant.
Since then, daily losses have widened to £1.2m, bringing the total bill to £359m, according to figures revealed to Parliament last month.
Steel industry analysts have questioned how long the government will continue to prop up British Steel, with costs rising at a time when production levels in the wider UK steel industry have fallen to their lowest level in more than a century.
Gareth Stace, director general at industry body UK Steel, said the deals with ERG were essential to a sustainable turnaround at British steel.
“Rail is a strategically important, high-value product and is central to British Steel’s long-term planning, as well as the wider UK steel sector. Unlike more commoditized grades, rail requires advanced efficiency, consistent quality and long-term customer relationships. British Steel is a globally respected manufacturer with a strong international customer base,” Stace said.
He called on the government to strengthen UK import safeguards and work to bring energy costs for UK steel producers in line with their international competitors, saying “agreements alone cannot address the structural pressures facing the sector.”
