KARACHI — Pakistan and Russia have moved their long-discussed plan to resurrect the dormant Pakistan Steel Mills (PSM) from intent to timeline, with officials confirming that physical construction on the Karachi facility is now targeted to begin in 2027, in what stands as one of the most concrete developments in bilateral economic ties this year.
A parliamentary panel was told in January that the two sides had set 2027 as the start date for the revival project, with work to commence once the Engineering, Procurement and Construction (EPC) contract is finalised, according to Business Recorder. The briefing followed the signing of a second protocol under the Pakistan–Russia Inter-Governmental Commission (IGC), under which both sides agreed to prepare a bankable EPC framework, Profit by Pakistan Today reported. That second protocol was concluded at the 10th meeting of the IGC held in late November 2025, the same outlet noted.
Momentum has continued since. In April, Pakistan finalised a third protocol with a Russian private company under which the firm will provide both technical expertise and financial support for a phased rehabilitation and expansion of the mill, ProPakistani reported. Under that protocol, the annual production capacity of Pakistan Steel Mills is targeted to reach three million tonnes, the same report stated — a substantial step up for a plant whose historical output hovered around 1.1 million tonnes.
The Karachi facility carries deep historical resonance for both partners. It was originally built with Soviet technical assistance in the 1970s, Arab News reported, and has remained non-operational since 2015 amid mounting losses, political interference and financial mismanagement. Despite the shutdown, the mill still carried more than 3,500 employees on its payroll, while cumulative losses had reached Rs255.8 billion ($902 million) and liabilities stood at Rs359.9 billion ($1.27 billion) by the end of the 2024 financial year, the outlet reported.
Russian officials have framed the project as a renewal of Cold War-era industrial cooperation. Andrey Fedorov, Russia’s Consul-General in Karachi, said earlier that Moscow was “ready to prepare a roadmap for the construction of a new steel mill” and that “practically, a new factory must be erected,” Arab News reported. The two governments have separately discussed establishing fresh steelmaking capacity in Karachi alongside the rehabilitation of the existing plant, the report added.
The protocols have been signed at successive intervals at the Pakistan Embassy in Moscow by Saif Anjum, Secretary of Industries and Production, and Vadim Velichko, General Director of the Russian firm Industrial Engineering LLC, Arab News reported. Special Assistant to the Prime Minister Haroon Akhtar Khan said reviving PSM with Russian support “reflects our shared history and commitment to a stronger industrial future,” according to the same outlet.
For all the diplomatic warmth, the project’s success will hinge on the EPC framework and the financing arrangements still being negotiated, with construction not expected until 2027, per Business Recorder. If realised, the revival would mark the most significant Russian industrial investment in Pakistan in decades — and a tangible test of whether the two countries can convert repeated protocols into steel.
