Cement Industry Faces Shutdown Crisis in Koshi State
The cement industry in Koshi State is grappling with an acute operational crisis, primarily due to a severe shortage of locally-produced clinker, a crucial raw material for cement manufacturing. Of the 15 cement factories in the region, 13 are unable to produce their own clinker, which has led to a shutdown or near-shutdown situation for many plants.
The situation is dire, with cement production now relying on imported clinker, a costly alternative that has made it increasingly difficult for companies to stay competitive. Notably, only a few cement factories, such as Nigale Cement Private Limited in Sindhuwa, Dhankuta, and Udayapur Cement Industries Ltd in Jaljale, Udayapur, manage to produce their own clinker. The rest of the plants face substantial challenges in sourcing clinker economically, further compounding their operational difficulties. Among the affected factories, Nepal Ultratech Cements Pvt Ltd in Morang and Annapurna Cement in Morang have already ceased operations, and three out of eight cement factories in Jhapa have completely shut down. The remaining factories in Jhapa are operating at just 25% of their capacity, adding further strain to the region’s cement production capabilities. Other factories in the region, including those in Morang, Sunsari, and Udayapur, have also reached the brink of closure.
According to Rajendra Raut, President of the Koshi Chapter of the Federation of Nepal Industry and Commerce, and the owner of Annapurna Cement, the high costs of importing clinker have made it increasingly unfeasible for industries to operate, especially those with large investments. The president highlighted that many factories are on the verge of permanent shutdown due to the unsustainable operational costs and inability to compete with cement manufacturers that have access to their own clinker production. Adding to the challenges, the Nepali cement industry is also facing financial distress due to the government’s failure to release capital, along with unpaid loans, and the cessation of exports for industries that have failed to meet quality standards in India. These factors have collectively dealt a heavy blow to the local cement industry.
While 21 cement factories in Nepal manage to meet demand through their own clinker production, the appeal from operators of grinding plants to the government has largely gone unanswered. Industry players argue that the lack of support and the inability to access affordable clinker supplies are jeopardising the long-term sustainability of the sector. Manish Maru, the owner of Ultratech Cement in the Sunsari-Morang Industrial Corridor, stated that their plant has been shut down for over a year and a half due to the unavailability of clinker. He pointed out that when domestic cement demand is adequately fulfilled by factories with their own clinker production, the government’s focus has largely shifted away from addressing the pressing concerns of grinding plants struggling to source raw materials. As the cement industry continues to battle these operational and financial hurdles, the future of many plants in Koshi State remains uncertain. The ongoing clinker shortage, coupled with the industry’s inability to remain competitive in the face of escalating costs, may result in further closures if prompt solutions are not found.
