In a significant setback to foreign investment efforts, Century Steel Group, one of China’s largest companies, has warned of shutting down operations and withdrawing its investment from Pakistan. The company cites unresolved issues related to the management of foreign investments in the China-Pakistan Economic Corridor (CPEC) Rashakai Special Economic Zone in Khyber Pakhtunkhwa.
A senior government official reportedly told media outlets that Prime Minister Shehbaz Sharif has established a committee led by Federal Minister Aleem Khan, with members from both federal and provincial governments, to address the Chinese company’s concerns. This move comes in response to a letter from Century Steel Group Private Limited’s CEO, Li Chunjian, to the Prime Minister, stating that the company is on the verge of exiting Pakistan if its grievances are not immediately resolved.
The letter, labeled as the company’s “final notice” to the government, outlines Century Steel’s decision to withdraw its project due to persistent issues in coordination and problem-solving by various Pakistani institutions overseeing foreign investments in RSEZ. It warns that if solutions are not promptly implemented, the company will begin dismantling its plant in the economic zone.
Century Steel said that it had initially entered Pakistan with ambitious plans to establish the country’s largest steel mill in three phases at the RSEZ in Khyber Pakhtunkhwa. The first phase involves an $82 million investment, with over $30 million already spent on achieving a planned annual production capacity of 500,000 tons of steel products. Future phases were expected to bring an additional $200 million investment, introducing advanced steel production technology from China and ultimately achieving a production capacity of 1.5 million tons within five years.
The company emphasized its vision to contribute to Pakistan’s GDP, create thousands of jobs, and expand steel exports to regional markets. However, ongoing security concerns and political instability have complicated these goals.
Chinese nationals involved in CPEC projects have faced repeated attacks, including last month’s deadly assault in Karachi by the Baloch Liberation Army (BLA). These incidents have highlighted vulnerabilities in protecting Chinese citizens and investors, prompting calls for more robust security measures.
The CPEC, hailed as a transformative initiative for Pakistan’s economy, has faced criticism from Baloch nationalist and armed factions, who view it as exploitative. Protests and attacks targeting CPEC infrastructure, including self-sacrificing strikes by the BLA’s Majeed Brigade, have escalated, particularly in Balochistan, where Gwadar Port and other Chinese projects have become focal points for unrest.
Analysts warn that the recent high-security attack in Karachi signals the BLA’s growing capability to strike Chinese interests across Pakistan. The potential withdrawal of Century Steel Group could mark a significant blow to Pakistan’s efforts to attract foreign investment under CPEC.