Kathmandu: Until a decade ago, Nepal relied heavily on imported cement from India. However, the devastating 7.8 magnitude Gorkha earthquake in 2015 significantly increased the demand for cement, prompting Nepal to become self-sufficient in cement production by 2019. This transformation was largely driven by substantial investments in Nepal's cement industry.
According to Global Voices, in 2017, China's Hongshi Group signed a foreign direct investment deal with the Nepalese government worth USD 359 million, marking the largest foreign direct investment industrial project in Nepal's manufacturing sector at that time. Hongshi Group partnered with Nepal's Shivam Cement to construct a state-of-the-art cement plant in the Nawalparasi district, with a 70 percent stake and an agreement to produce 12,000 tons of cement per day.
Hongshi Group's investment in Nepal is celebrated in Beijing as a model of China's early ventures abroad under its Belt and Road Initiative (BRI). It represents one of the first large-scale attempts by a Chinese cement company to expand internationally and has turned profitable. Chinese officials often cite it as evidence that the BRI can deliver mutual benefits, helping Chinese firms gain global experience while revitalizing local economies.
In Nepal, the project has generated approximately 10,000 jobs, built infrastructure, and boosted regional trade. However, this narrative of prosperity masks an imbalance, as environmental and social costs often burden local communities where limestone is mined, and the dust never fully clears.
In 2019, another Chinese cement company, Huaxin, invested USD 140 million in Nepal, aiming to produce 3,000 tons of cement per day. Hongshi and Huaxin were some of the largest foreign investors in Nepal at that time.
According to the Economic Survey 2013-14, Nepal possesses 1.07 billion tons of limestone deposits, enough to sustain cement production for at least 100 years. Driven by post-earthquake reconstruction demand, Nepal's cement industry experienced a boom, with several domestic companies establishing operations.
Currently, Nepal has 124 registered cement factories, with 72 operational and producing up to 22 million tons per year, leading to cement exports to India beginning in July 2022.
Despite the industry's growth, environmental impacts have been significant. Unprecedented monsoon rains caused devastating floods in September 2024, killing nearly 250 people, with unregulated quarrying and sand mining exacerbating the destruction in the Rosi Valley.
A 2021 study by the Nepal Rastra Bank found that 92 percent of respondents reported air, water, noise, and soil pollution from cement industries, affecting their livelihoods. Imported technology, promoted as cleaner and more efficient, complicates local resistance, making it difficult to oppose such investments despite environmental harm.
Air pollution is a significant health risk in Nepal, with 41,300 deaths in 2023 attributed to hazardous air pollutants, including emissions from cement industries. The cement industry in Nepal has an estimated annual turnover of NPR 150 billion (over USD 1 billion) and generated NPR 3.85 billion (USD 24 million) in export revenue to India in 2023/24. However, this development comes at a substantial social and environmental cost, increasing Nepal's carbon footprint.
India's unofficial embargo on Nepal-manufactured cement, starting in 2024, further complicates the situation. Despite the high quality of Nepali cement, Indian officials stopped issuing IS stamps due to concerns over Chinese involvement, causing shutdowns in Nepal's cement factories.
Chinese investments have been pivotal in Nepal's cement self-sufficiency, but the ecological costs are significant. Similar patterns are observed in other countries, such as Tajikistan, where Chinese investment transformed the cement industry but also led to environmental challenges.
Historically, environmental activism in Nepal, such as the closure of the Himal Cement Factory in 2002, highlights ongoing struggles against industrial pollution. However, illegal riverbed mining persists, and environmental activists like Dilip Mahato face threats and violence, emphasizing the complex legacy of industrial development in Nepal.