New steel mills in Karachi: Pakistan, Russia agree to constitute working group

ISLAMABAD: Pakistan and Russia have agreed to constitute a working group to move forward on a proposal of establishing a new steel mill in Karachi.

The development came here on Wednesday during Russia’s Deputy Minister for Industry and Trade Aleksei Gruzdev’s meeting with Federal Minister for Industries and Production Rana Tanveer Hussain.

Hussain said that both sides deliberated on strengthening mutual cooperation and the government of Pakistan is considering a proposal to establish a new steel mill in Karachi with Russian cooperation and both countries agreed to form a working group to move forward on the project.

The minister informed the Russian deputy minister that the government of Pakistan has earmarked 700 acres land of Pakistan Steel Mills (PSM) for establishing a new steel mill.

He said despite being blessed with considerable reserves of iron ore with an estimated reserves of 1.887 billion tons, Pakistan is forced to import around $2.7 billion of iron and steel annually.

There is a perpetual gap between domestic production and demand of iron and steel. For the last year, the gap is estimated at 3.1 million tons, Hussain added.

Pakistan’s per capita steel consumption level is below even those of developing countries indicating significant growth potential over medium and long term. He said efficiency of Pakistan’s steel industry is limited as it is segmented (600 small units) and based on old inefficient technology.

The proposed site is located at Karachi and is close to Port Qasim that reduces cost of transportation of raw materials. Pakistan’s industrial and agricultural experts are set to visit Russia, marking a significant step in strengthening bilateral ties between the two nations.

During the meeting, both sides emphasised balance trade between both countries.

Hussain stressed the need for modern agricultural machinery to boost crop yields and enhance agricultural productivity. He said the government will provide all the facilities to the Russian investor in the country.

Gruzdev said that his country will provide modern agricultural machinery to Pakistan in order to boost crop yields and enhance agricultural productivity across the country.

The meeting was attended by Deputy Trade Representative of the Russian Federation in Pakistan Denis Nevzorov, Secretary for Industries and Production Saif Anjum, Secretary National Food Security and Research Ali Tahir, Additional Secretary National Food Security Amir Mohyudin, Deputy Chief Industries and Production Abdul Samad and Executive Engineer PSM Muhammad Shoaib.

According to a recent report of the Ministry of Industries and Production submitted to the National Assembly, Pakistan has not yet entered into formal discussions about restoring PSM. However, following a meeting between President Asif Ali Zardari and Russian officials on April 4, 2024, where Russia offered assistance for PSM, Pakistan is also considering establishing a new steel mill.

The report highlighted that a memorandum of understanding (MoU) signed in 2003 between Pakistan and Russia aimed to revive and expand PSM, leading to an agreement with Tyazhpromexport Russia. This company helps foreign countries with the design, construction, and modernisation of metallurgical plants and related enterprises. Another MoU in 2013 involved a request for a $1 million credit facility from Russia.

Copyright Business Recorder, 2024