British Steel Secures Major Turkish Rail Contract Amid Ongoing Challenges
British Steel has announced a significant commercial achievement with an eight-figure contract to supply rail for a high-speed electric railway in Turkey. The deal, valued at tens of millions of pounds, involves providing 36,000 tonnes of rail to ERG International Group for a 599-kilometer line connecting Ankara to İzmir. This project is expected to reduce travel times and carbon emissions in Turkey.
Job Creation and Production Boost in Scunthorpe
The contract has enabled British Steel to create 23 new roles at its Scunthorpe facility in north Lincolnshire. More notably, it has allowed the company to restart round-the-clock rail manufacturing for the first time in over a decade. This development marks a positive step for the site, which employs approximately 3,500 people in producing long steels for infrastructure like buildings, bridges, and railways.
Supported by UK Export Finance, the agreement is seen as a crucial commercial boost for the loss-making manufacturer. Gareth Stace, director general of UK Steel, emphasized the importance of such deals, stating they are "essential to underpinning a sustainable turnaround" at British Steel. He highlighted rail as a strategically vital, high-value product that requires advanced capabilities and consistent quality.
Persistent Financial and Structural Challenges
Despite this success, serious questions remain about the long-term viability of the Scunthorpe plant. British Steel has faced a turbulent history, including its collapse into insolvency in 2019 after being bought by Greybull Capital in 2016. China's Jingye Group acquired it in 2020 but announced plans last year to shut the Scunthorpe works due to daily losses of £700,000.
The UK government intervened with emergency legislation to take control of the plant after Jingye rejected support for raw materials. However, financial pressures have intensified, with daily losses now widening to £1.2 million and total costs reaching £359 million, as disclosed to parliament recently.
Industry Calls for Government Support
Steel industry analysts are questioning how long the government can continue to prop up British Steel, especially as UK steel production has fallen to its lowest level in more than a century. Stace called on the government to strengthen import safeguards and ensure energy costs for UK steel producers are competitive internationally. He warned that "contracts alone cannot address the structural pressures facing the sector," underscoring the need for broader policy measures to sustain the industry.
This contract represents a temporary lifeline for British Steel, but its future hinges on addressing deeper financial and operational challenges in an increasingly competitive global market.
