Union Pacific Railroad (NYSE: UNP) and Rocky Mountain Steel Mills announced a new seven-year contract for domestic steel rail production. The agreement ensures Union Pacific will purchase the majority of its rail from the Pueblo, Colorado facility, which is the only remaining dedicated rail production facility in the United States.

The contract ends pending legal disputes between the companies, with Union Pacific withdrawing its previously filed lawsuit in Nebraska. Union Pacific has sourced steel rail from the Rocky Mountain Steel facility since the early 1890s.

Rocky Mountain Steel expects to begin operations this year at a new long rail mill, constructed with a more than $1 billion investment. The facility will produce 100-meter lengths of premium rail, requiring 80% fewer welds than standard 80-foot rails. The mill is powered by a dedicated 1,800-acre solar farm.

"We appreciate the longstanding relationship with Rocky Mountain Steel, its dedicated workforce and their collective commitment to domestic steel manufacturing," said Jim Vena, CEO of Union Pacific. "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."

Doug Matthews, CEO of Orion Steel, the parent company of Rocky Mountain Steel Mills, said the contract "reinforces the one-of-a-kind partnership between Union Pacific Railroad and Rocky Mountain Steel, a relationship that traces its roots back to the 1890's."

Steel at the facility is produced by members of the United Steelworkers union. Rocky Mountain Steel operates as one of the largest producers of steel products in North America, according to the press release.