India’s Friend Russia Strengthens Ties with Pakistan, Set to Revive Pakistan Steel Mills

Russia has decided to breathe new life into Pakistan’s steel industry under a fresh agreement. Once a vital part of Pakistan’s economy, the country’s steel sector is currently on the brink of collapse.

Growing Pakistan-Russia Ties
In recent months, relations between Pakistan and Russia have shown signs of thawing. As part of a revival project, both countries have agreed to start construction next year. The Public Accounts Committee of Pakistan confirmed that the project is a key component of a bilateral agreement, under which Russia will help rehabilitate Pakistan’s steel industry. Work is slated to begin in 2027, signaling not only economic cooperation but also an improvement in diplomatic ties. This move has drawn global attention, given Russia’s traditional alliance with India and Pakistan’s historical alignment with the United States.

According to Pakistan’s Industries Secretary, “Construction will commence following the signing of an Engineering, Procurement, and Construction (EPC) contract with the Russian side. In November 2025, the Pakistan-Russia Inter-Government Commission signed a second protocol to restart Pakistan Steel Mills and agreed to prepare a bankable EPC contract to move the project forward. Recently, the Russian firm Industrial Engineering LLC conducted a technical audit of the steel mills during a visit to Pakistan.”

Reviving the Steel Giant
Pakistan Steel Mills (PSM) has been struggling under massive debt, totaling PKR 345 billion. Despite this, Russia has expressed interest in restarting operations. If revived with Russian assistance, PSM could significantly boost Pakistan’s economy. Russian technical teams have already visited the site for assessment.

PSM has been closed since 2015. For decades, it was one of Pakistan’s largest industrial institutions. Its closure led to thousands losing their jobs. However, reviving the mill poses significant challenges, including modernizing outdated technology and managing its massive debt burden.

Expanding Bilateral Relations
In 2023, Pakistan successfully imported oil from Russia for the first time, marking a strategic move that opened the door for closer economic cooperation. Since then, the two countries have expanded ties across several sectors. While current cooperation is primarily economic, there is potential for collaboration in defense as well.

Russia has shown interest not only in Pakistan Steel Mills but also in Pakistan Railways, which is struggling financially. In collaboration with the UAE, Russia has indicated potential investment in the railway sector. These initiatives point toward a new chapter in Pakistan-Russia relations.