Gorkha Earthquake Impact: Nepalese Iron & Steel Industries

Nepal Steel and Iron Rolling Mills Association (NSIRMA) assured that although post-earthquake Nepalese steel and iron industry might be utilizing around 48% of its production capacity, it would be sufficient to meet the demand. When the Gorkha Earthquake rocked the nation, there were around 20 steel and iron factories operating across the country.

This sector consists of industries like the rebar industry, corrugated iron industry, and wire industry, among others. The steel rod industry, under normal conditions has an estimated annual production capacity of 1.5 million tons. Likewise, the corrugated iron industry and wire industry has an annual production capacity of around 300,000 tons and around 200,000 tons respectively. (New Business Age, July 2015)

Reinforcement Steel Bar Industries

There was no earthquake casualty reported by the factories surveyed for this paper. Only minor damages were recorded in iron & steel factories all over the country. The damages were mostly done to the sheds and boundary walls of the plants. Following the earthquake, individual factories incurred a drastic 80% to 90% loss of revenue due to reduced demand, production and sales.

It is estimated that the rolling mill industry as a whole experienced a total revenue loss of over NPR 10 billion in the first 3 months after the earthquake. There are 16 reinforcement steel bar industries in the country. Depending on the size of the organization, the number of workers employed in them varied from 200 to 3000. Except for few exceptions where employees left the job out of earthquake fear, the crisis did not cause any major layoff in the industry.

After the earthquake the production was interrupted for at least 1 month or as long as 6 months in major iron & steel industries. The causes of interruption were mostly absent employees, reduced demand and government imposed restriction on new constructions. The individual factories around the country experienced an estimated 33% reduction in their production capacity. The reduced production capacity was mainly caused by the lack of raw materials, fuels, employees as well as reduced demand for the reinforcement steel bars.

Before the earthquake the country had an estimated demand of around 875,000 MT every year.  In the following three months after the earthquake the demand went down as low as 50% of the total annual demand of the country. Please see Table 1.

Table 1. A comparison of nationwide production and demand projection for Steel Bar

table-1

Out of the 16 reinforcement steel bar industries nationwide, 12 factories produced around 849,000 MT of steel bars annually. The total national production capacity was 1,131,000 MT before the earthquake. Please see the Table 2.

Table 2. Factory location and production capacity of Reinforcement Steel Bar industries in Nepal

table-2

The total annual projected demand for reinforcement steel bar is over 1 million MT which comprises the annual demand of 875,000 MT and reconstruction demand of around 140,000 MT. The projected annual production of 757,770 MT was based on the first three months’ production after the earthquake and later the reduced production was mainly due to fuel crisis, power shortage and supply-chain disruption. The reinforcement steel bar industries were confident that the future reconstruction demand would be met successfully once the situations improved.

CGI Sheet Industries

During the survey, there was no earthquake casualty reported by the CGI Sheet factories. Apart from minor damages to the sheds and boundary walls of the factories, there were also some serious damages reported such as spill of molten zinc and severe damage to the coal gasification plant. The estimated total loss was over NPR 100 million.

There was no evident revenue loss since the need for CGI Sheets increased due to skyrocketing demand of temporary shelters right after the Gorkha Earthquake. There are 4 major CGI Sheet industries in the country and no loss of employment recorded due to the earthquake.

Despite first couple of weeks of production interruption due to minor facility damages and fear among the employees, businesses did not face major hardship to recover from the earthquake crisis. Due to increased demand, CGI Sheet industries had to increase their production by nearly 80% in the first few months following the earthquake.

Before the earthquake the country had an estimated demand of around 150,000 MT CGI Sheets every year. Please see Table 3.

Table 3. A comparison of nationwide production and demand projection for CGI Sheet

table-3

Before the Gorkha Earthquake, 4 CGI Sheet industries produced around 234,000 MT of CGI Sheets every year. Please see the Table 4 for individual capacity of each of the CGI Sheet industries countrywide.

Table 4. Factory location and production capacity of CGI Sheet industries in Nepal

table-4

The total annual projected demand for CGI Sheets is around 240,000 MT which comprises the annual demand of 150,000 MT and reconstruction demand of around 90,000 MT. In the following months, the demand was expected to stay more or less the same as new constructions had come to a halt while the demand for new shelters had gone up. CGI Sheet industries had to increase their production by nearly 80% in the first few months after the earthquake. Following the trend, the projected annual production after the earthquake was estimated to be 421,200 MT which could sufficiently meet the reconstruction demand of the country.

GI Wire Industries

After the earthquake, there were only minor incidents of boundary wall collapses were reported. There was no major or minor casualty reported by the factories surveyed for this study. Around 50% to 70% loss of revenue every month was reported due to reduced sales in the months following the earthquake. Altogether there are 5 major GI Wire industries throughout the country. An estimated 2,500 employees are working in them. No job loss was reported by the factories due to the earthquake.

GI Wire businesses did not face much hardship to recover from the earthquake crisis, although due to minor facility damages and fear among the employees, there was production interruption for the first couple of weeks after the earthquake. The estimated annual capacity of all the GI industries in Nepal is 78,300 MT. In the first few months after the quake, due to reduced demand and insufficient power supply, the production dropped by around 9%.

Before the earthquake the country had an estimated demand of around 25,000 MT of GI Wires every year. In the months and years following the earthquake the demand was expected to rise by around 50%. Please see Table 5.

Table 5. A comparison of nationwide production and demand projection for GI Wire

table-5

Altogether five GI Wire industries produced around 78,300 MT of GI Wire every year. Please see the Table 6 for the individual capacity of each of the GI Wire industries countrywide.

Table 6. Factory location and production capacity of GI Wire industries in Nepal

table-6

The total annual projected demand for GI Wire after the earthquake is 35,000 MT which comprised the national annual demand of 25,000 MT and reconstruction demand of around 10,000 MT. The projected annual production of 71,253 MT after the earthquake is well above the future GI Wire demand of the country.

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About SafeNEPAL

Environmental health & safety professionals for planet, people and profit.
This entry was posted in Businesses & Organizations, Gorkha Earthquake 2015, Private Sector and tagged , , , , , , , , . Bookmark the permalink.

2 Responses to Gorkha Earthquake Impact: Nepalese Iron & Steel Industries

  1. Pingback: Earthquake Impact: Iron & Steel Industries in Nepal | SafeNEPAL

  2. Pingback: Disaster Risks in Nepal: Perception Review | SafeNEPAL

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