The extensive infrastructure development initiative taken by the government of Nepal coupled with post-earthquake construction is inflating the demand for cement in the country. Moreover, its demand is expected to rise significantly in short and mid-term because several construction projects along with 21 National Pride Projects will be gaining momentum.
According to a study, Nepal consumes over 8 million tons of cement annually. Of this total consumption, nearly 80% demand is fulfilled by domestic production whereas country relies on imports from India for remaining 20%. However, from clinker production perspective, the country produces almost 70% of clinker at local level and imports the remaining proportion from India to meet the demand.
The surging consumption of cement in this Himalayan nation is presenting lucrative prospect for both cement manufacturers—domestic and foreign.
Currently, almost 50 domestic manufacturers are involved in the production of cement. They are expected to achieve remarkable feat as cement sector is estimated to witness double digit growth standing in between 12% to 15% on average every year till mid-term.
Their active participation in the market is gradually helping Nepal to become self-reliant in the space of cement production resulting decrease in swelling trade deficit especially with India by up to US $600 million a year.
This promising growth of the sector is also attracting investment from the countries like China, Nigeria and India. For instance, companies like Hongshi and Huaxin from China are investing US $360 million and US $140 million, respectively.
Hongshi in joint venture with Nepal based Shivam cement is likely to start production within couple of months. It is estimated to have daily production capacity of 12,000 tons, which is ten times the capacity of any cement manufacturing plant that Nepal has in current prospect. Huaxin, on the other hand, in joint venture with Narayani Pvt. Ltd. will be producing 3,000 tons cement a day at initial stage.
The optimistic cement sector is likely to attract more foreign investment in Nepal in coming days. It is because with the increasing construction works, the country cannot meet the future demand for the cement from currently available plants.
For instance, more than 30 hydropower projects are under construction at present of which 12 projects are of over 300 MW. Similarly, Nepal will be building over 2,000 bridges in near and mid-term, the country will upgrade one international airport and construct three international airports in addition to a number of large irrigation projects.
Besides, government’s initiation in the development of smart city will also likely unfold immense opportunity for cement sector as green building alone with investment potential of US 3.4 billion will be triggering enormous demand for cement.
Hence, cement industry in Nepal is emerging as sunrise sector for foreign and domestic investors which is expected to boost country’s export apart from fulfilling nation’s domestic demand.
Find more information on “Uncovering Nepal—Exploring Trends and Emerging Growth Opportunities”
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830