Kathmandu: Until ten years ago, Nepal relied heavily on importing cement from India, but the devastating 7.8 magnitude Gorkha earthquake in 2015 significantly increased demand for construction materials. By 2019, Nepal had become self-sufficient in cement production thanks to substantial investments in its cement industry.
According to Global Voices, one of the major catalysts for this growth was a foreign direct investment deal in 2017 between China’s Hongshi Group and the government of Nepal, valued at USD 359 million. This partnership led to the establishment of a state-of-the-art cement plant in the Nawalparasi district, boosting the local economy and creating thousands of jobs. However, while the investment is hailed as a success story in China, concerns are mounting in Nepal regarding the environmental and social costs of such projects.
In 2019, Huaxin, another Chinese cement company, entered the Nepali market with an investment of USD 140 million. Both Hongshi and Huaxin are among the largest foreign investors in Nepal’s cement industry. Nepal’s Economic Survey 2013-14 indicated that the country has 1.07 billion tons of limestone deposits, enough to sustain cement production for at least 100 years. This abundance of resources has attracted both foreign and domestic investment, leading to significant growth in the industry.
However, the rapid expansion of the cement industry has not come without consequences. Environmental impacts, such as air, water, and soil pollution, are increasingly concerning local communities. A 2021 study by Nepal Rastra Bank found that 92 percent of respondents believed cement industries adversely affected their environment and livelihoods. Additionally, recent floods in the Rosi Valley, exacerbated by unregulated quarrying, highlight the urgent need for better industry regulation and environmental safeguards.
Despite claims of using cleaner technology, the environmental and health impacts of cement production remain significant. In 2023, air pollution was a leading risk factor for death in Nepal, with industrial emissions contributing substantially to hazardous pollution levels. The cement industry’s growth has also increased Nepal’s carbon footprint, conflicting with the country’s commitment to achieving net-zero emissions by 2045.
The industry’s challenges are compounded by geopolitical factors. In 2024, India imposed an unofficial embargo on Nepal-manufactured cement, citing concerns about products developed with Chinese components. This embargo has led to operational shutdowns for some Nepali cement factories, highlighting the complex interplay between economic development and international relations.
While Chinese investments have undeniably contributed to Nepal’s self-sufficiency in cement production, the environmental and social costs cannot be ignored. Historical lessons from other countries, such as Tajikistan and Kazakhstan, serve as cautionary tales about the potential long-term impacts of prioritizing industrial growth over environmental sustainability.
Nepal’s experience with cement production is reminiscent of the legacy of the state-owned Himal Cement Factory, established in 1967. Despite its initial success, the factory was eventually shut down in 2002 following local protests over pollution. This closure underscores the potential power of community activism in addressing environmental concerns, a legacy that continues to resonate as Nepal navigates the challenges of balancing industrial growth with environmental protection.