This story by Qian Sun and Sonia Awale originally appeared on Global Voices on November 25, 2025
Until ten years ago, Nepal was importing cement from India, but after the 7.8 magnitude Gorkha earthquake in Nepal in 2015, the demand increased several-fold, and by 2019, the country had become self-sufficient in producing the construction material. This was largely possible due to large investments in Nepal’s cement industry.
In 2017, China’s Hongshi Group signed a foreign direct investment deal with the government of Nepal worth USD 359 million. At that time, it was the largest foreign direct investment industrial project in Nepal’s manufacturing sector.
Hongshi Group partnered with Nepal’s Shivam Cement to build a state-of-the-art cement plant in Nawalparasi district, where it had a 70 percent stake, with an agreement to produce 12,000 tons of cement per day.
Hongshi Group’s investment in Nepal is often celebrated in Beijing as a model story of China’s early ventures abroad as part of its Belt and Road Initiative (BRI), its international development and connectivity project. It was among the first large-scale attempts by a Chinese cement company to expand internationally, and its joint venture in Nawalparasi has indeed turned profitable. Chinese officials frequently cite it as proof that the BRI can deliver mutual benefit — helping Chinese firms gain global experience while “revitalizing the local economy.”
In Nepal, the project has generated at least 10,000 jobs, built roads, and boosted regional trade. Yet this narrative of shared prosperity also masks an imbalance. While profits and prestige flow upward, the environmental and social costs often settle quietly in the valleys where the limestone is mined and the dust never fully clears.
Two years later, in 2019, another Chinese cement company, Huaxin, entered Nepal with an investment worth USD 140 million, and with targets to produce 3,000 tons of cement per day. Hongshi and Huaxin were also some of the biggest foreign investors in Nepal until that point.
According to the Economic Survey 2013–14, Nepal has 1.07 billion tons of limestone deposits, enough to sustain cement production in the country for at least 100 years. As such, driven by the demand for reconstruction post-2015 disasters, Nepal saw a boom in the cement industry, with several domestic companies also setting up operations.
From the very first cement factory set up in 1967, Nepal now has 124 registered cement factories, with 72 operating across the country and producing up to 22 million tons per year. Consequently, Nepal started exporting cement to India in July 2022.
The 2024 September floods in Nepal that killed nearly 250 people across the country were triggered by unprecedented monsoon rains. However, the destruction in Rosi Valley, which saw at least 69 deaths, had more to do with unregulated quarrying and sand mining in its catchment. As a result, the rivers were forced to flow through narrow channels, and the debris-filled waters swept into the populated floodplains.
But it was only a tip of the iceberg. Unregulated and often illegal quarrying, where companies extract more than permitted, lack of safeguards, and overexploitation have led to worsening floods and landslides, as well as air, water, and soil pollution, in recent times.
In a 2021 study by the Nepal Rastra Bank, 92 percent of respondents said that cement industries caused air, water, noise, and soil pollution in their communities, severely impacting their livelihoods. Another 2021 paper published in the Journal of Development Innovations directly linked soil erosion to poor management and monitoring of Nepal’s limestone mines and harmful excavation practices.
The imported technology, often promoted as cleaner and more efficient, adds a layer of complexity to local resistance. Because FDI-based factories tend to use more advanced machinery and modern filtration systems, they appear environmentally superior to older domestic plants. This technical advantage makes it difficult for the government — or even affected communities — to oppose such investments, as they are framed as progress. In public discourse, rejecting these projects can seem irrational or anti-development, even when the surrounding villages still bear the brunt of dust, noise, and altered landscapes. The promise of “better technology” thus softens critique and reshapes what counts as acceptable harm.
Speaking to Himalkhabar in 2022, locals in Palpa and Dang districts talked about the impact on groundwater supply, soil and air pollution, and public health from nearby cement plants. They even organized protests opposing the operation of plants, but they fell on deaf ears.
Mahendra Pandey said, “Everyone talks about the benefits of the cement industry, but no one cares about how it affects us farmers here. The government is no help; it does not care about what the people here on the ground face.”
Air pollution is already one of the biggest risk factors for death in Nepal, ahead of tobacco and high blood pressure. A total of 41,300 people died of exposure to hazardous levels of pollutants in the air in 2023, as per the State of the Global Air 2025 report. Emissions from industries such as cement are one of the leading sources of ambient PM2.5, particles in the air with a diameter of 2.5 micrometers or less, which can cause health issues and are linked with heart and lung diseases, cancers, COPD, diabetes, and dementia, among other issues.
The cement industry in Nepal has an estimated annual turnover of around NPR 150 billion (over USD 1 billion). It also generated NPR 3.85 billion (USD 24 million) in revenue from exports to India in the financial year 2023/24. But all of this development comes at an enormous social and environmental cost. In fact, the unsupervised cement industry not only affects public health and ecology but also increases Nepal’s carbon footprint at a time when the country has committed to achieving net-zero emissions by 2045.
Starting in 2024, India put an unofficial embargo on Nepal-manufactured cement. Indian officials stopped issuing IS stamps, which are certifications that the cement meets the requirements of the Bureau of Indian Standards. This is despite domestic companies’ claim that Nepali cements were of higher quality compared to their Indian counterparts.
But much like with hydropower, India didn’t want any products from Nepal developed with Chinese components. This led to a series of shutdowns or partial functioning of cement factories within the country.
Chinese companies Hongshi and Huaxin were pivotal in Nepal gaining self-sufficiency in cement production and were directly responsible for thousands of locals being employed. But Nepal is in a long list of countries that have similarly benefited but also lost ecologically.
While the effects of Chinese investment in Nepal’s cement industry are still coming to pass, other countries offer insight into how the expansions might play out. For example, China transformed Tajikistan from an importer of cement to one of the largest exporters of cement in Central Asia. All of this started with Huaxin and Tajik Gayur Group launching JV Huaxin Gayur Cement in the southwestern Khatlon province, which had an annual capacity of 1.2 million tons. Two more companies launched their plants a year later, and in 2024, five more plants were built with Chinese investments.
Immediate benefits of these companies, including jobs to the local population, sometimes attached with access to healthcare and education, as well as royalties to the government, mean opposition is hard to come by based primarily on the environmental cost. It is also often difficult to directly link health and environmental impacts to any specific infrastructure project or emissions.
And even when complaints are filed, chances are that the local community may not receive a favorable result, as was the case with a village in Kazakhstan that sought compensation as well as shut down or relocation of the Gezhouba Shieli cement plant.
The district and provincial courts initially ruled in favour of villagers, that the plant was built too close to the residential area, against the prevailing legal framework. But the federal Kazakh government ultimately amended the regulations regarding the mandatory distance between hazardous plants and residential areas.
In the end, Gezhouba Shieli cement plant was allowed to continue operating from the same location and further polluting the area without any repercussions.
State-owned Himal Cement Factory was established in 1967 in Kathmandu’s Chobhar with German assistance and had a capacity of 160 tons per day. This increased to 200 tons after renovation. Before this, cement for construction was imported from India, Singapore, or Europe.
But over three decades later, opposition grew over emissions from the plant. Following local agitation, the company agreed to install filters to reduce dust emissions from the stack, prepare a long-overdue environmental impact assessment, and build a retaining wall to protect the nearby areas from landslides.
The plant was eventually shut down for good in 2002 after Chobhar launched a large-scale campaign against dust and air pollution. Experts said that up to 80 percent of the dust and soot that gets trapped by the winter inversion in Kathmandu Valley is from Himal Cement, and that Kathmandu was the only major city in the world with a cement factory in full-scale production only four km from the city centre. The plant was finally shut down in 2002.
This is one of the first high-profile closures of an industry pertaining to environmental concerns in Nepal; many others followed suit. The legacy of Himal Cement and its end is a reminder of a fragile balance between ecology and economy.
But years later, illegal riverbed mining continues unabated. And when an environmental activist, Dilip Mahato, spoke out against a local sand mafia, he was murdered in cold blood. His family is still awaiting justice.
[VP]
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