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Union Pacific, Rocky Mountain Steel Sign Rail Supply Deal
Railroad Says 7-Year Agreement Underscores Company's Commitment to US-Made Steel Rail as It Pursues Merger
Key Takeaways:
- Union Pacific secured a seven-year contract with Rocky Mountain Steel on April 16 for U.S.-made rail as it pursues a transcontinental merger.
- Rocky Mountain Steel’s Pueblo, Colo., mill is investing more than $1 billion to make 328-foot rail requiring about 80% fewer welds at a new long-rail mill set to begin operations later this year.
- Union Pacific and Norfolk Southern are revising a merger application after a January rejection by regulators.
As Union Pacific pursues a merger that would create the nation’s first transcontinental railroad, the company is securing long-term access to U.S.-made steel rail through a new seven-year contract with Rocky Mountain Steel Mills.
Union Pacific and Rocky Mountain Steel announced the agreement April 16, highlighting the railroad’s commitment to domestic manufacturing as it plans future infrastructure needs.
Rocky Mountain Steel’s facility in Pueblo, Colo., is the only remaining dedicated steel rail production mill in the United States, according to the companies. Union Pacific has sourced rail from the Pueblo site since the early 1890s.
“We appreciate the long-standing relationship with Rocky Mountain Steel, its dedicated workforce and their collective commitment to domestic steel manufacturing,” Union Pacific CEO Jim Vena said in a statement. “The new long-rail mill is a significant step forward in American manufacturing that supports Union Pacific’s focus on delivering safe, reliable service for our customers.”
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Vena also linked the agreement to Union Pacific’s proposed merger with Norfolk Southern, saying the partnership with Rocky Mountain Steel becomes more important as the railroad seeks to expand its network. The merger, if approved, would combine Eastern and Western rail systems into a single coast-to-coast operation.
Union Pacific's initial application to acquire Norfolk Southern was rejected by the Surface Transportation Board in January because it was insufficient, and the companies are working to correct the deficiencies. STB said at the time that “the board’s decision to reject the application should not be read as an indication of how the board might ultimately assess any revised application or future informational needs, should applicants decide to submit a revised application."
Rocky Mountain Steel expects to begin operations later this year at a new long-rail mill at the Pueblo site, built with more than $1 billion in investment. The facility is designed to produce 328-foot rail, which is longer than traditional 80-foot sections.
The longer rail is expected to improve efficiency and safety by reducing the number of welds required along track segments. The company said the new rail length requires about 80% fewer welds.
The mill will operate a new rail production line and will be powered by a dedicated 1,800-acre solar farm, according to the release. Rocky Mountain Steel said the project will be the world’s largest solar-powered steel mill.
Doug Matthews, CEO of Orion Steel, the parent company of Rocky Mountain Steel Mills, said the agreement reinforces the companies’ long partnership.
“This mill is an essential part of America’s steel transportation infrastructure,” Matthews said.
Steel produced at the Pueblo facility for Union Pacific and other customers is made by members of the United Steelworkers union, the companies said. The agreement also resolves legal disputes between the companies, as Union Pacific has withdrawn a previously filed lawsuit in Nebraska.
The relationship between Union Pacific and the Pueblo mill dates to the expansion of Western railroads, when rail access supported domestic steel production in the region.
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