Cement output hurt by slowdown

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Though there are around three dozen cement industries in Nepal, the country has to import around 40 per cent cement to meet the domestic demand.

“Some 29 already established big cement industries with installed capacity of around 12,700-tonne per day can supply only around 60 per cent of the demand,” said Jayandra Chudal, executive director of the Bishal Cement. Bishal Cement is a Rs 500-million close-circuit plant planning to start production by this April.

Last year, when the country witnessed a construction boom, cement industry emerged as a new investment avenue. The Central Bureau of Statistics has predicted an increase in the contribution of construction sector to 6.62 per cent to the gross domestic product (GDP) in the last fiscal year, compared to a fiscal year ago, due to increase in construction materials, government and private sector construction activities.

“However, there is a slowdown this year,” he said, adding that the companies are now producing half of their installed capacity due to slowdown in the construction business.

“If all the companies that are under construction come into operation, the total production capacity will reach above 16,000 tonne a day, excluding the industries that have 100 tonne and less capacity,” Chudal said.

Of the 29, seven are mine-based cement industries, including government owned Hetauda Cement and Udayapur Cement, and others include Maruti Cement, Butwal Cement, Supreme Cement, and Dynasty Cement that have Integrated Unit (IU).

Some new industries like Shivam Cement, Ghorahi Cement, Sonapur Cement, Rolpa Cement that are under construction are also mine-based that use the lime stone mines to produce clinker for the cement.

Due to more mine based industries, the contribution of mines to the GDP is also predicted to be 4.23 per cent from a fiscal year ago.

The government in its budget for the current fiscal year has announced to give higher priority to the completion of roads and electricity transmission lines for upcoming cement industries in Udayapur, Makawanpur, Dhading, Rolpa, and Dang.

The cement industries are upbeat. “The local cement industries’ could be encouraged, if only local housing and hydropower companies start using local cement coupled with government incentives,” Chudal said.

The government has also promised to provide benefit of direct purchase of diesel form Nepal Oil Corporation at dealer’s price, in quantity exceeding at least one tanker at a time, for industrial and commercial uses for the manufacturing industries in view of power outage that has hurt the industries.

“Consumer awareness about the quality of cement is as important as power supply to keep productions on track,” he added.

source: Chailse, Kuvera (2011),"Cement output hurt by slowdown",The Himalayan Times, 20 Jan 2011

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