Learn about bringing Foreign direct investment in Cement Factory in Nepal. Nepal is an excellent location for doing business in the cement industry. The country is estimated to have 1.07 billion tons of limestone deposits. Limestone rocks are non-metallic inorganic minerals with sedimentary origins.
Calcite (calcium carbonate, CaCO3) and dolomite are the two most important constituents of limestone. Limestone is used in the manufacturing of cement.
Limestone deposits have been discovered in Udaypur, Dhankuta, Sindhuli, Makwanpur, Lalitpur, Dhanding, Syangja, Argakhanchi, Surkhet, Dang, Salyan, Baitadi, and Palpa, according to the report. Cement is in high demand in Nepal.
According to the report, Nepal will require 26 million tonnes of cement per year by 2024-25. Nepal officially has 55 cement industries in operation, with three FDI-based, two government-owned, and 50 domestically and privately run.
In Nepal, it is gradually gaining traction. Massive megaprojects are being implemented in Nepal. Several large, medium, and small projects are currently under construction, including a large number of national pride projects, and are the primary drivers of cement demand.
The total amount of foreign direct investment in Nepal’s cement industry is Rs56.97 billion. The FDI-based cement industries in Nepal are Hongshi-Shivam Cement Pvt. Ltd. (70 percent), Arghakhanchi Cement Pvt. Ltd. (70 percent), and Arghakhanchi Cement Pvt. Ltd. (70 percent) (with the respective percentage of foreign investment in parenthesis). (18%), Maruti Cement Ltd. (21%), Tianyi cement industries Pvt. Ltd. (70%), and Hauxin cement Narayani Pvt. Ltd. (100 percent). Foreign investment is required in Nepal. Cement demand in Nepal necessitates foreign direct investment.
Due to improved technology, foreign-funded cement factories have been found to be more efficient and profitable than government-owned or private cement factories.
How to Start a Cement Plant in Nepal?
A foreign investor must invest at least NPR 50 million to establish a cement factory.
1. Nepal Investment Promotion Board
The first step in establishing a cement factory in Nepal is to draft a proposal and submit it to the Nepal Investment Board, along with detailed information on limestone and land requirements. Domestic and international airlines, as well as ground handling and maintenance, are all available.
2. The Department of Mines and Geology approved the limestone mine
The limestone mine is the most critical component in the operation of a cement factory. The Department of Mines and Geology must grant permission for limestone mines.
The Department receives Royalty in exchange for granting extraction permission for a maximum of 30 years.
The following are the procedures for extracting the limestone
The Department of Mines and Geology will provide detailed information relating to the Limestone’s capacity and the agreement of the activities of the mineral to be carried out, and that the relevant detailed information should be outlined along with a timeframe of at least 60 days for granting permission for the operation of minerals activities. These must be included when it is made available to the public in a daily national newspaper.
- Direct Communication: The cement factory that wishes to operate the Limestone mine should make direct contact with the Department of Mines and Geology before starting operations with limestone.
- Contract for the extraction of limestone: The Department of Mines and Geology will reach an agreement for the Limestone extraction Contract in order to run the Cement Factory. The contract will include the following information.
- Agreement Goal
- Limestone Extraction Time
- Duties and Responsibilities of Cement Factory or Owner of Limestone Mine
- Employer Safety Measures
Conclusion
Corporate Lawyer Nepal will offer legal advice on foreign investment in the Cement Factory. In the first step, we provide legal assistance in obtaining permission from Nepal’s Investment Board for foreign investment. We will also assist with the acquisition of land in Nepal in order to build a cement factory. If you need such legal assistance, please contact us at +977-9849517735 or info@corporatelawyernepal.com.np
Alpana Bhandari is a founding partner and CEO of Prime Legal Consultants and Research Center. She graduated from American University Washington College of Law. She specializes in corporate/arbitration and family law.
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