Pakistan Steel Mills: Still Losing Billions a Decade After the Furnaces Went Cold

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Pakistan Steel Mills, on the edge of Karachi, is one of the largest industrial sites in the country. It was meant to make Pakistan self sufficient in steel. It has not produced any since June 2015.

And yet it keeps losing money. In the three financial years to June 2026, the closed mill lost Rs79.3 billion, according to official figures reported by The Express Tribune. About 72 percent of that loss was interest on old loans.

How does a factory that makes nothing lose that much? Munshi opens the ledger.

A national dream

The idea of a national steel mill was debated through the 1950s and 1960s. In 1971 the Soviet Union agreed to help build it. Prime Minister Zulfikar Ali Bhutto laid the foundation stone on 30 December 1973. The first blast furnace was lit in August 1981, and the plant was formally completed on 15 January 1985.

It was designed for an eventual 2.2 million tonnes a year and commissioned at 1.1 million tonnes. The site covers about 18,660 acres, and at one stage the mill employed around 30,000 people.

Profit, then decline

For a while the mill made money. By the 2007-08 financial year it had built up an accumulated profit of Rs9.54 billion, Profit reported. After that, losses began, and they never stopped.

The Express Tribune describes the plant today as obsolete, and says it lost its home market to imported steel. The mill sought bailouts as it ran at a fraction of its capacity, and production stopped altogether in June 2015.

The sale that did not happen

There was a moment when the story could have gone differently. In 2006 the government sold a 75 percent stake to a consortium for $362 million. On 23 June 2006, Pakistan's Supreme Court annulled the sale, finding the process hasty and irregular.

The mill stayed in state hands. Every later attempt to sell it or bring in a partner has stalled. Lawmakers in the Senate were later told that no one was interested in buying it.

Read the ledger

This is where a closed factory becomes expensive.

From the 2015 shutdown to October 2019, the government spent Rs87.6 billion in bailouts to pay salaries and fixed costs, with no steel produced, Profit reported. At that point the mill had assets of Rs149 billion against liabilities of Rs219 billion and accumulated losses of Rs207 billion.

In 2020 the government decided to cut the workforce, and in November that year 4,544 employees were laid off.

That reduced salary costs, but not the debt. According to the government's Central Monitoring Unit, as reported by The Express Tribune, the mill owes Rs108 billion on a loan from the finance ministry, which alone costs about Rs11.5 billion in interest a year, plus more than Rs40 billion to banks, mainly the state owned National Bank of Pakistan.

So the loss now looks like this. In FY26 alone the mill lost Rs24 billion. Its interest bill that year was Rs17.7 billion. Salaries over the last three years were only Rs3.9 billion. The mill is no longer losing money because it makes steel badly. It loses money because it borrowed to survive and is now paying interest on loans it cannot repay.

What comes next

The Central Monitoring Unit has recommended cleaning up the debt, moving liabilities into a holding company and forming joint ventures with global steel makers, the same approach used to sell PIA. The finance ministry had not acted on those recommendations, The Express Tribune reported. Without reform, the unit warned, the mill will remain a drain on public money.

What the ledger teaches

There are two lessons in this ledger. The first is that waiting is expensive. A sale in 2006 was cancelled. Twenty years later, the government is still paying interest every month on a factory that produces nothing.

The second is about debt. Loans taken to keep a failing business alive do not save the business. They just move the losses into the future, with interest.

Questions to ask about any state owned company

• Does it make a product people buy, or does it survive on bailouts?
• How much of its loss is interest on past loans?
• Who owns the debt, and who will pay it if the company never recovers?
• What is the cost of waiting another year to decide?

The ledger

Munshi's noteClosing a factory does not close its debts. Interest keeps running long after the furnaces stop.

Sources

1. Profit (Pakistan Today), 27 November 2019Pakistan spent Rs87.6bn in four years to bailout PSM
2. The Express Tribune, October 2026Closed steel mill causes Rs79b loss
3. ProPakistani, 22 September 2026Closed Pakistan Steel Mill accumulates Rs 79.3 billion in losses over 3 years
4. Profit (Pakistan Today)No one interested in buying the Pakistan Steel Mills, Senate told
5. WikipediaPakistan Steel Mills

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