Pakistan partners with Russia to revive a Soviet-era steel mill, aiming to slash steel imports by one-third and strengthen its economic independence while reducing pressure on foreign exchange reserves.
At a Glance
- Pakistan and Russia are establishing a new steel mill on 700 acres near Port Qasim in Karachi to reduce Pakistan’s dependency on imported steel
- The project aims to modernize Pakistan’s outdated steel production technology and help close the current production-demand gap of 3.1 million tons
- Russian technical teams have already assessed the defunct Pakistan Steel Mills, which has been non-operational since 2015 with accumulated losses over $800 million
- This collaboration is part of broader Pakistan-Russia economic cooperation, including energy projects and potential agricultural machinery imports
- The initiative represents a strategic move to leverage Pakistan’s natural resources, create jobs, and strengthen its economic self-reliance
Rebuilding Soviet Legacy with Modern Technology
Pakistan and Russia have formed working groups to establish a new steel mill on the site of a former Soviet-operated facility that closed in the early 1990s. The project will utilize 700 acres of land from the existing Pakistan Steel Mills complex near Port Qasim in Karachi. This strategic location will reduce transportation costs while enhancing production capabilities. The initiative follows meetings between Russian Deputy Minister Aleksei Gruzdev and Pakistan’s Minister Rana Tanveer Hussain, where both sides agreed to move forward with the project.
A Russian technical team has already completed an assessment of the Pakistan Steel Mills, which has been non-operational since 2015 and accumulated losses exceeding $800 million. The new facility is expected to introduce modern technology to Pakistan’s steel industry, which currently relies on outdated production methods. This modernization aims to significantly improve efficiency and production capacity, potentially transforming Pakistan from a steel importer to a producer capable of meeting domestic demands.
Addressing Pakistan’s Steel Production Gap
Despite having significant iron ore reserves, Pakistan faces a substantial gap between production and demand. Last year alone, the country experienced a shortfall of 3.1 million tons of steel. The new mill aims to reduce Pakistan’s reliance on imported steel by approximately one-third, which would have a significant positive impact on foreign exchange reserves. This production boost comes at a critical time as the country works to stabilize its economy amid challenging global conditions.
“Rana Tanveer Hussain highlighted that Pakistan’s steel consumption per capita remains below the global average, which signals a vast potential for growth over the medium and long term.”, said Rana Tanveer Hussain.
The partnership with Russia is expected to bring advanced steel production technology to Pakistan, enabling large-scale production that could potentially lead to exports in the future. By focusing on domestic production, Pakistan can not only save valuable foreign currency but also create new jobs and stimulate local economies. The initiative aligns with national goals of increasing self-reliance and reducing dependency on international markets for essential industrial materials.
Expanding Bilateral Relations
This steel mill project represents just one component of growing economic cooperation between Pakistan and Russia. The two nations are also collaborating on the Pakistan Stream gas project and considering modernization of the Quetta-Taftan railway line. Additionally, Pakistan has recently begun importing discounted Russian crude oil and liquefied petroleum gas, further strengthening economic ties between the countries.
During recent meetings, Pakistani officials emphasized the country’s emergence as a strong and safe destination for international investment. Haroon Akhtar Khan, Special Assistant to the Prime Minister of Pakistan, invited Russian businesspeople to explore additional investment opportunities in Pakistan. The collaboration demonstrates how Pakistan is diversifying its international partnerships while seeking technological advancement and economic growth through strategic relationships with major global powers.
