The Russian government has proposed two options for the revival of Pakistan Steel Mills (PSM), offering one model based on the traditional blast furnace technology costing $1.91 billion and another using Electric Arc Furnace (EAF) technology at a cost of $1.05 billion, BR reported, citing officials familiar with the matter.
According to the officials, the Russian side stated that “the revival of the current mill on the blast furnace model will require a one-time investment of $1.91 billion, while a new steel mill based on EAF technology will cost approximately $1.05 billion.”
They explained that while the EAF model appears cheaper in the short term, its reliance on imported scrap makes it less sustainable. In contrast, the blast furnace model allows the use of locally available iron ore, offering long-term cost efficiency and reduced import dependence.
These proposals were formally submitted to the Ministry of Industries and Production following Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan’s visit to Moscow in July, where Pakistan and Russia signed an agreement to revive and expand the Karachi-based PSM — originally established in 1973 with Soviet support.
Pakistan, despite possessing an estimated 1.887 billion tonnes of iron ore reserves, currently imports about $6 billion worth of iron, steel, and scrap annually to meet domestic demand. The country faces a production gap of nearly 3.1 million tonnes of steel, according to ministry data.
Officials also pointed out that Pakistan’s steel consumption per capita remains well below global averages, suggesting significant growth potential. The steel sector, comprising over 600 small units, operates largely on outdated and inefficient technology.
