ISLAMABAD / MOSCOW – July 12, 2025:
In a major step toward reviving Pakistan’s industrial sector, Pakistan and Russia have signed a comprehensive agreement to restore and expand the Pakistan Steel Mills (PSM) in Karachi. The move marks a significant milestone in the long-standing ties between the two countries.
✍️ Agreement Signed in Moscow
The agreement was signed on Friday at the Pakistan Embassy in Moscow by:
- Saif Anjum – Secretary, Ministry of Industries and Production (Pakistan)
- Vadim Velichko – General Director, Industries Engineering LLC (Russia)
The signing ceremony was witnessed by Special Assistant to the Prime Minister Haroon Akhtar Khan and Ambassador Muhammad Khalid Jamali, among other dignitaries.
🔄 PSM: From Soviet-Era Legacy to Future Industrial Engine
Originally built in 1973 with Soviet assistance, the Pakistan Steel Mills was once the largest industrial unit in the country. However, operations ceased in 2015 due to prolonged financial losses and infrastructural decay.
“Reviving the Pakistan Steel Mills with Russia’s support reflects our shared history and commitment to a stronger industrial future,” said Haroon Akhtar Khan.
⚙️ Revival and Expansion: What’s New?
The new agreement goes beyond just restoring the existing mill. Key developments include:
- Modernization of PSM’s infrastructure and production lines
- Joint development of new steel mills in Karachi
- Transfer of Russian industrial and engineering expertise
- Emphasis on import substitution and job creation
📉 Collapse Timeline: Why Did PSM Fail?
PSM began incurring major losses post-2008 due to:
- Political interference and overstaffing
- Gas shortages and power outages
- Influx of cheap Chinese steel imports under the 2007 Pakistan-China FTA
- Poor management and lack of reinvestment in infrastructure
By 2018, the mill’s total losses had ballooned to over Rs200 billion, despite occasional bailouts.
🤝 Strategic Meetings and Diplomatic Backing
Earlier this week, a Pakistani delegation led by SAPM on Foreign Affairs Tariq Fatemi and Haroon Akhtar Khan met with Russian Deputy Prime Minister Alexei Overchuk in Moscow. The focus: steel sector cooperation and long-term economic ties.
Russian official Denis Nazaroof also met with Khan to discuss plans for new steel mills in Karachi.
🚫 No Privatization, Full State Control
Contrary to previous attempts at privatization, the government has removed PSM from its 2024–2029 privatization roadmap. The revived steel mill will remain a state-owned enterprise, with foreign collaboration limited to technical and engineering partnerships.
📈 Economic & Strategic Impacts
The PSM revival and expansion is expected to:
- Boost domestic steel production
- Reduce Pakistan’s dependency on steel imports
- Generate thousands of new jobs
- Strengthen Pakistan-Russia economic ties
- Potentially open doors for broader industrial and energy cooperation
📌 Conclusion
The Pakistan-Russia agreement marks the beginning of a new industrial chapter in Pakistan’s history, one that not only honors a Soviet-era legacy but also promises a forward-looking approach to sustainable and sovereign industrial growth.slamabad and Moscow.
