Pueblo County Commissioner Sal Pace said the deal will help a long-struggling industry.
"While the steel mill has been in a bit of a dip, this is a much-needed shot in the arm when we most desperately need it," Pace said.
The improvements on about 100 miles of track begin this week. The contract is worth $8.25 million.
Pace is still working to add a Pueblo stop to the Amtrak line.