KARACHI – In a potential turning point for Pakistan’s ailing industrial sector, Russia is preparing to finalize an agreement with Islamabad for the construction of a brand-new steel mill in Karachi—marking the first formal confirmation of the project by a Russian official.
Speaking to Arab News in a recent interview, Russian Consul-General Andrey V. Fedorov revealed that both countries are now engaged in technical discussions and high-level negotiations to outline the framework for the venture, which aims to breathe new life into Pakistan’s dormant steel manufacturing capabilities.
“The last negotiations were held on May 27, and we are working on the final agreement,” Fedorov stated. “Our technical experts have already inspected the site, and another team is expected to arrive soon to finalize preparations.”
The planned facility would effectively replace the now-defunct Pakistan Steel Mills (PSM)—a sprawling industrial complex on the outskirts of Karachi originally built in the 1970s with Soviet assistance. Once hailed as a cornerstone of national self-reliance, the mill was shut down in 2015 after years of political interference, financial losses, and chronic mismanagement.
As of the end of the 2024 fiscal year, PSM had accumulated staggering losses of Rs255.8 billion ($902 million), with liabilities ballooning to Rs359.9 billion ($1.27 billion)—all while continuing to employ over 3,500 people despite its non-operational status.
According to Fedorov, Russian and Pakistani technical teams are now close to agreeing on a “mutually beneficial” roadmap for the proposed steel plant.
“Practically, a new factory must be erected,” he said. “The groundwork now lies with the experts from both sides to design and agree upon the construction details.”
While no fixed date has been announced for the start of construction, Fedorov indicated that a deal could be signed as early as this summer.
“They were discussing summer… and since we are already in it, I hope this summer we will see some positive outcomes and reach agreements.”
Although the Russian diplomat declined to disclose the expected volume of investment, he emphasized that both countries are focused on finalizing contracts that benefit each side, suggesting the project could be a key milestone in strengthening bilateral economic cooperation.
The announcement comes at a time when Pakistan is desperately seeking industrial revival and foreign investment to ease the pressure on its struggling economy. For many, the revival of steel production in Karachi—especially with Russian backing—could symbolize a much-needed step toward rebuilding the country’s industrial backbone.
