Boost to British Steel as Turkey places high-speed rail order

British Steel has secured an order worth tens of millions of pounds to supply rail for a high-speed electric railway in Turkey, amid continuing uncertainty over the long-term future of the government-controlled steelworks in Scunthorpe.

The site will supply 36,000 tonnes of rail to ERG International Group, the company announced, in what it called an “eight-figure agreement”.

The rail is destined for a 599km railway line being built to connect the Turkish capital, Ankara, with the western port city of İzmir, which will reduce the travel time and cut carbon emissions.

British Steel said securing the contract had allowed it to create 23 new roles at the north Lincolnshire site and to restart round-the-clock rail manufacturing for the first time in more than a decade.

The deal, which was supported by UK Export Finance, is seen as a commercial boost for the loss-making manufacturer.

However, questions remain over the long-term viability of the Scunthorpe site, where about 3,500 people work turning iron ore into the long steels required for buildings, bridges and railways.

British Steel was bought by the private equity group Greybull Capital in 2016 but collapsed into insolvency three years later. China’s Jingye Group bought it out of receivership in early 2020, but announced last year that it was planning to shut the Scunthorpe steelworks amid losses of £700,000 a day.

After Jingye rejected support to buy raw materials, the UK government stepped in with emergency legislation to take control of the plant.

Since then, daily losses have widened to £1.2m, with the total bill reaching £359m, according to figures disclosed to parliament last month.

Steel industry analysts have questioned how long the government will keep propping up British Steel, as costs mount at a time when production levels in the wider UK steel industry have tumbled to the lowest level in more than a century.

Gareth Stace, director general at industry body UK Steel, said deals such as the one with ERG were “essential to underpinning a sustainable turnaround” at British Steel.

“Rail is a strategically vital, high-value product and central to British Steel’s long-term plan, as well as to the wider UK steel sector. Unlike more commoditised grades, rail requires advanced capability, 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 on ensuring energy costs for UK steel producers matched those of their international competitors, adding: “Contracts alone cannot address the structural pressures facing the sector.”