Russia expects to finalize an agreement with Pakistan this summer to build a new steel mill in Karachi, Consul-General Andrey V. Fedorov said on Monday, the first time a Russian official has publicly confirmed the planned project.

The new project will mark the revival of Cold War-era industrial cooperation as Islamabad seeks fresh foreign investment and closer ties with Moscow.

The Soviet Union built the original Pakistan Steel Mills (PSM) in Karachi in the 1970s as the country’s flagship state-run industrial complex. Once a symbol of national self-sufficiency, PSM has remained dormant since 2015 due to years of mismanagement, political interference and financial decline. By the end of fiscal year 2024, the mill had posted cumulative losses of Rs255.8 billion ($902 million), with liabilities reaching Rs359.9 billion ($1.27 billion). Despite being non-operational, it still employs more than 3,500 workers.

Now, Russian and Pakistani officials are engaged in technical and diplomatic discussions to finalize the framework for a new steel mill. Technical experts from Russia have already inspected the proposed site in Karachi, and another team is expected shortly to advance planning and draft a detailed roadmap.

“The last negotiations were on May 27, so we are working on the final agreement,” Fedorov told Arab News in an interview when asked about the status of the new steel deal.