Russia, Pakistan deciding financing model for PSM steel plant upgrade

MOSCOW. Nov 27 (Interfax) - Russia and Pakistan are deciding in a financing model for the project to upgrade Pakistan Steel Mills (PSM) in Karachi, Sergei Tsivilev, co-chair of the Russian-Pakistani intergovernmental commission and Russia's energy minister, said in an interview with Pakistan's The News International.

A PSM delegation and Russian officials signed a protocol on cooperation for the plant's modernization in the summer. The parties are currently working on further steps to implement the project, Tsivilev said.

"We are looking at building a metallurgical plant at the PSM site using local raw materials," he said.

The steel plant was built in the 1970s with help from the Soviet Union. According to financial statements for the 2023 financial year, the plant has been in the red since at least 2008, and production capacity has been shut down. At the time of its closure, the plant's production capacity was estimated at 1.1 million tonnes of steel per year.

Pakistan hoped to sign an agreement with Russia to modernize and expand Pakistan Steel Mills back in 2013. At the time, the investment requirement was estimated at $400 million-$500 million.

In March 2006, a consortium of Magnitogorsk Iron & Steel Works , Al-Tuwairqi and Arif Habib Group won an auction for 75% of Pakistan Steel, offering $362 million. But local protests prevented the deal from going forward and the Supreme Court annulled the auction results.