Importance Of Cement Industry In Nepal

CHAPTER-5

FOREIGN DIRECT INVESTMENT OPPORTUNITY IN CEMENT INDUSTRY

5.1 Cement market in Nepal

5.1.1 Background

Cement is a most important construction material for all of the infrastructures. It is produced by clinker, gypsum and flyash. The major raw material is clinker which constitutes 97% of cement and clinker is produced from limestone.

Use of cement in Nepal was started since 1950s. At that time, cement was imported from India, China, Korea and many other countries. The commercial import of cement was startedd from 1970s from China. In 1975, Himal Cement Industry was established under the government ownership which was the first cement industry in Nepal and was dissloved in 2002 with some environmental issues as the factory was located

Many of the countries in South Asia will enjoy more than 5% economic growth in future. For the growth, cement consumption will also increase. As shown above, India is the cement deficit country, with imited limestones and high economic growth rate will be the most market attractive country. Bangaladesh is also a high growth country with no limestone mines, but now it is importing clinker from South Asian Countries. Bangaladesh can be a big market for Nepalese cement. Bhutan is another country with low limestone contains and in future it will be the market of Nepalese cement. Sri Lanka is also afast growing economy with limited raw material contains and high demand. Pakistan is the only country of cement surplus in the South Asian region. Except Pakistan, all other countries have big cement market and it will grow rapidly in future. Other countries have less capacity to produce cement in their home country. So, the growing demand of the cement in the region and limited raw material availability in other countries assures Nepalese cement

About 1.25 billions of metric tons limestone deposits are scientifically identified in the region. Udayapur, Khotang, Syangja, Dang, Rolpa, Palpa and many more places of the country have high quality limestones which are under exploitation. The whole country contains several billions of metric tons of limestones deposits which are under exploitation.A published report (Kantipur Daily, July 12, 2013), shows that the country is sitting on a pile of more than 1.07 billion tonnes of limestone which is good quality for cement production. This implies that there is large limestone mines in Nepal probably the largest in South Asia. According to Investment Board of Nepal, limestone of cement grade deposits in Nepal is more than 2.5 billion metric tons. This abundant resource for cement production is creating a enourmous opportunity