Kathmandu: Until about a decade ago, Nepal relied heavily on importing cement from India. However, after the devastating 7.8 magnitude Gorkha earthquake struck the nation in 2015, the demand for cement surged dramatically, prompting significant investments in Nepal’s cement industry. By 2019, Nepal had achieved self-sufficiency in cement production, a milestone largely attributed to foreign investments, particularly from Chinese companies.
According to Global Voices, a pivotal moment came in 2017 when China’s Hongshi Group entered into a $359 million foreign direct investment deal with the government of Nepal. This investment marked the largest foreign direct investment in Nepal’s manufacturing sector at the time. Hongshi Group partnered with Nepal’s Shivam Cement to construct a modern cement plant in the Nawalparasi district, with a production capacity of 12,000 tons per day.
Hongshi Group’s venture in Nepal is often heralded in Beijing as a testament to the success of China’s Belt and Road Initiative (BRI), which aims to enhance global development and connectivity. The joint venture in Nawalparasi has turned profitable, showcasing the BRI’s potential to deliver mutual benefits by providing Chinese firms with global experience while revitalizing local economies. The project has created approximately 10,000 jobs, improved infrastructure, and stimulated regional trade.
Nevertheless, this narrative of prosperity conceals underlying issues. While profits and prestige accrue, the environmental and social costs are borne by the communities where limestone is extracted. Unregulated quarrying and sand mining have contributed to severe environmental degradation, including floods and landslides. A 2021 study by the Nepal Rastra Bank revealed that 92% of respondents attributed air, water, noise, and soil pollution to cement industries, adversely affecting their livelihoods.
The environmental impact extends beyond immediate concerns. In 2024, floods caused by excessive monsoon rains claimed nearly 250 lives, with the Rosi Valley experiencing significant destruction due to unregulated quarrying. The debris-filled waters compounded the devastation in populated areas.
Despite the promise of advanced technology used by foreign direct investment-based factories, which appear environmentally superior to older domestic plants, the complexities of local resistance remain. This technological edge often stifles opposition to such investments, even when communities bear the brunt of pollution and altered landscapes.
The situation is compounded by India’s unofficial embargo on Nepal-manufactured cement, implemented in 2024. Indian officials halted the issuance of IS certifications, preventing the export of Nepali cement, which was claimed to be of higher quality than Indian counterparts. This embargo led to disruptions in Nepal’s cement industry, heavily reliant on Chinese components.
While Chinese investments have propelled Nepal towards self-sufficiency in cement production, the environmental and social costs continue to mount. The legacy of state-owned Himal Cement Factory, which faced closure due to local agitation against pollution, underscores the challenges of balancing economic growth with environmental responsibility. As Nepal grapples with these issues, the nation must navigate the complex interplay of foreign investment, economic development, and environmental stewardship.