Cement Industries in Nepal: Aftermath of the Gorkha Earthquake 2015

INTRODUCTION

Cement Manufacturers Association of Nepal (CMAN) claimed that the ban on building construction immediately after the Gorkha Earthquake induced an estimated 85 percent dip in the demand for cement. Since before the quake cement factories were operating only at about 50 percent of their installed capacity, it was estimated that they could fulfill an additional 50 percent demand in the coming months when reconstruction would start in full swing. As per CMAN there were 46 cement industries producing a total of around 4 million MT cement every year before the earthquake. Major 16 cement industries had the annual production capacity of around 3.5 million MT cement nationwide. Please see Table 1.

Table 1. Factory location and production capacity of Cement industries in Nepal (Source: NSET)

table-1

ESTIMATION OF DAMAGE, LOSS, CAPACITY & DEMAND

Except for some minor injuries to employees and their families, there was no significant casualty in cement industries. Only minor damages were recorded in some factories ranging from NPR 50,000 to NPR 15 million in loss. The damages were mostly to the sheds and boundary walls. Overall the total damage loss was estimated to be over NPR 100 million.

Following the Gorkha Earthquake, individual factories incurred 25% to 95% loss of revenue due to reduced demand, production and sales. It was estimated that the industry experienced a total revenue loss of NPR 3 billion in the first 3 months alone. Out of over 10,000 workers employed in cement industries all over the country, around 25% were believed to have lost their jobs after the disaster. Most of them were daily wage workers. Please see Table 2.

Table 2. Information related to employee casualty, damage loss, revenue loss and employment loss

table-2

Since the earthquake damages were not significant, most of the factories were able to recover their production within a couple of weeks. The estimated production downtime due to the earthquake ranged from 2 days to 2 weeks for different factories; majorly due to the employees’ fear of future shaking. In the immediate aftermath of the quake, the production capacity of individual factories came down by only 30% to 35%. Later, due to the government restrictions on construction followed by reduced demand the production significantly dropped by 75%.

Before the earthquake the country had an estimated demand of around 5 million MT cement annually. In the next couple of years the demand was expected to shoot up by around 25% due to reconstruction activities. The market price of OPC Cement ranged from NPR 650 to NPR 750 per bag before the earthquake. But due to the hike in transportation cost and fuel crisis after the border closure, the unit market price increased by 15%. Please see Table 3.

Table 3. Information related to business recovery, production capacity, demand and market prices

table-3

Based on the trend of first 3 months after the earthquake the projected annual production was mere 1 million MT. The nationwide annual demand before the earthquake was around 5 million MT. In the months following the earthquake, due to the government regulations on construction bar, the demand for cement drastically came down to negligible numbers, although total annual projected demand after the earthquake was around 7 million MT. Please see Table 4.

Table 4. A comparison of nationwide production and demand projection for cement industries

table-4

SUMMARY

The national annual demand for cement before the earthquake was around 5 million MT while the annual projected demand increased to 7 million MT after the earthquake. Since the projected annual production of around 1 million MT was based on the first three months’ production trend after the earthquake and the reduced production was mainly due to fuel crisis, power shortage and supply-chain disruptions, the cement industries were certain that the future reconstruction demand could be met as the situations started improving in the country.

It is worth mentioning here that around 2 million MT of additional cement would be required to meet reconstruction demand alone; as projected by Post Disaster Needs Assessment. This demand would spread out in next couple of years or so hence might not overburden the industries’ annual targets in the future. Also, CMAN estimated that due to reconstruction activities there would be only 25% hike in total demand which could be easily sustained by Nepalese cement factories as most of them were operating 50% below their installed capacity even before the earthquake.

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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 Cement Industries in Nepal: Aftermath of the Gorkha Earthquake 2015

  1. Pingback: Earthquake Impact: Cement Industries in Nepal | SafeNEPAL

  2. Pingback: IEarthquake Impact: Cement Industries in Nepal | SafeNEPAL

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