Changes at the Dockyard terminus after 1922 included the cutting back of the trainshed beyond the buffer stops to the former concourse area, demolition of the engine shed, and removal of the turntable. The goods shed was retained, the site being dedicated to freight traffic. It is difficult to determine exactly when the railway connection between the Sheerness branch and the Royal Dockyard came into use. Period maps exclude much of the pertinent data relating to the dockyard layout, this area being represented by a large blank space, but a survey from 1898 does show a connecting branch leaving the Sheerness line immediately south of the original terminus. Indeed, its positioning correlates with the track which can still be seen today crossing the main Sheerness entry road beside the redundant steelworks complex.
The Royal Navy ceased to use Sheerness Dockyard in 1960, but the Merchant Navy operation continued. The former dockyard station site closed to public goods traffic on 6th May 1963, at which time both the original station building and goods shed were still standing. The station building was swiftly demolished, but the goods shed lingered on, and on 8th March 1965 the site was re-classified as a private siding.
We now come to the subject of Sheerness Steel Works, a large and interesting complex located at the northern end of the tight triangular junction with the Sheerness-on-Sea branch. First proposed in 1969, the construction of Sheerness Steel Works was given the go-ahead in 1971, building work beginning in that September on land largely occupied by Army playing fields. The building cost was priced at £10,000,000 (£105,921,790 at 2008 prices), and included swallowing up the former Sheerness Dockyard station site, in addition to a dock siding at Sheerness-on-Sea.
The works, a private venture under Canadian ownership, commenced operation in November 1972, and was designed to recycle scrap cars into steel coils and rods. The latter were for use in reinforced concrete and the steel mill had the capacity to process 180,000 tons of scrap metal per annum. It was envisaged that the mill’s yearly capacity could be increased to 400,000 tons within four years and, indeed, an additional £5,000,000 was invested in the works in 1975 to meet this target. Steel was produced using the electric arc process, and the mill remained a profitable venture until the second half of 1980. Much of the scrap metal dealt with originated from Mayer Parry Recycling of Erith, this being shipped down the Thames. Scrap metal and finished steel were also carried to and from the works by rail, and for this operation, new wagon batches – tailor-made for this type of traffic – were produced by ''Procor''. The rolling stock was leased by the steel mill at a time when there were few privately-owned wagons running on British Rail; indeed, this was one of a small number of works which was not part of the nationalised British Steel.
On the sectorisation of British Rail in 1982, the works acquired two dedicated Class 08 shunters: Nos. 08133 and 08216. These were turned out in the blue livery of Sheerness Steel, matching the existing privately-owned wagons. The locomotives were slightly modified for working in the yard: the front and rear buffer beams were fitted with metal sheet extensions, which took the rear of the shunters to just a few inches above rail level. The two shunters joined an interesting collection of 0-6-0 domestic diesels on site, at least one of which was remote-controlled. Withdrawal of the ex-BR locomotives occurred in 1995 and one of them, No. 08133, survived into preservation. EWS has provided a shunter since privatisation in February 1996.
For many years, Sheerness Steel Mill was owned and operated by Canadian-based ''Co-Steel'', but with this company's struggling finances, it was sold to ASW Holdings Limited of Cardiff, Wales, after a deal was finalised in December 1998. The latter could only keep the operation going until July 2002, the company subsequently going into receivership on 10th of that month - the end seemed nigh for the works. However, in January 2003 Sheerness Steel was taken over by the "Al-Tuwairqi Group" of Saudi Arabia and renamed "Thamesteel"; the prospect of new jobs being created at the site subsequently arose. The mill thereafter exported steel bars to the new owner's works in the Middle East. Steel production eventually ceased in late 2011 and in January of the following year, "Thamesteel" went into administration, all jobs at the site being lost.