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In a major development, Russia has emerged as the frontrunner in reviving the long-dormant Pakistan Steel Mills (PSM), marking a new phase of industrial collaboration between Islamabad and Moscow.
The breakthrough came with the signing of a bilateral protocol at the Pakistan Embassy in Moscow, between Secretary of Industries Saif Anjum and Vadim Velichko, head of Industrial Engineering LLC.
The agreement, aimed at restarting and expanding steel production, was witnessed by Special Assistant to the Prime Minister Haroon Akhtar Khan and Ambassador Muhammad Khalid Jamali.
Khan, on a visit to Russia, hailed the move as a revival of “shared history and commitment,” referring to Russia’s (then Soviet Union) original role in building the steel plant in 1971.
Profit & Loss of Pakistan Steel Mills
PSM operated profitably until 2007-08, posting a cumulative profit of Rs9.54 billion.
But following political interference, overstaffing, and operational inefficiencies, losses spiraled – Rs16.9 billion in 2008-09, reaching Rs118.7 billion within five years. The plant suffered further setbacks under the PPP and PML-N governments.
The PTI government’s revival initiative sparked a bidding contest between China and Russia. While China initially led the talks, progress stalled. Russia leveraged its historical role, arguing it was best placed to restore the facility.
Economic Pressures
The plant’s decline also stemmed from global economic factors, including low-priced steel imports, gas shortages, and Chinese steel dumping.
In 2016, the ECC acknowledged the Pakistan-China FTA’s role in accelerating PSM’s downfall. An Rs18.5 billion bailout was announced during the PML-N government to restore operations, but it failed to achieve its target of 77% production capacity.
By 2018, PSM’s losses neared Rs200 billion, and operations had come to a halt.
The recent Russia-Pakistan deal now offers new hope for revival. If successfully executed, it could reignite domestic steel production, reduce dependency on imports, and restore thousands of jobs.
It also reflects a shift in Pakistan’s industrial diplomacy, as Moscow reclaims its role in one of Pakistan’s landmark projects.
