Tata Steel wins contract to supply UK's Network Rail

Europe's second-largest steel producer said it could supply more than 1 million tonnes of rail under the contract

Tata Steel , Europe's second-largest steel producer, has won a new contract to supply Britain's Network Rail with more than 95 percent of its rails for at least five years.

The firm, which has been struggling to produce steel profitably in Britain due to shrinking demand plus high production, labour and logistics costs, said on Monday it could supply more than 1 million tonnes of rail under the contract.

The company's Scunthorpe plant, which produces steel for construction and infrastructure, is the current supplier to Network Rail. The plant's future would have been affected had the contract not been renewed.

"Rail has been one of the more dynamic sectors in the global long products market, and this is obviously good news for Tata in a European finished steel market that remains very challenging overall," said Chris Houlden, manager at metals, mining and fertiliser specialists CRU Research. (Reporting by Maytaal Angel; Editing by Mark Potter)