Kathmandu— Nepal continues to rely heavily on imported iron and steel products – reaching Rs. 169.56 billion in imports during fiscal year 2024/25, making it the second-largest import category after petroleum – despite possessing significant domestic iron ore deposits. Major mining projects intended to reduce this reliance at Dhaubadi, Jhumlabang, and Phulchoki have struggled to gain momentum due to a combination of environmental concerns, local resistance, inadequate infrastructure, and policy challenges. The stalled development highlights the factors contributing to Nepal’s shift towards an import-based economy and threatens its goal of achieving self-reliance.

Iron Ore: A Crucial Resource

Modern infrastructure is considered vital for economic growth, with iron and steel industries playing a foundational role in developing transportation, energy, and social services. Nepal’s dependence on imported iron and steel products represents a significant drain on its economy, costing billions of rupees annually. The country possesses abundant iron deposits but has yet to effectively exploit them for domestic industrial use.

Jhumlabang Project Faces Local Opposition

The Jhumlabang deposit in Rukum (East) is estimated to contain around 200 million tonnes of iron ore, exceeding the Dhaubadi site’s reserves. However, drilling work planned by the Department of Mines and Geology has been stalled due to protests from local residents against a private company that was awarded a lease for the project 30 years ago. The remote location also suffers from a lack of essential infrastructure like roads and IT connectivity.

Dhaubadi Progress Remains Slow

While prioritized by the government, the Dhaubadi iron mining project has seen limited substantive progress. Dhaubadi Iron Company Limited is currently conducting chemical analysis of ore samples and preparing a Detailed Project Report (DPR). The DMG estimates that Jhumlabang could potentially yield 3,000 tonnes of iron from processing, while Dhaubadi could produce 1,500 tonnes.

Phulchoki Mining Halted by Court Ruling

A crucial project in Phulchoki has been completely halted for the past twelve years following a court decision prohibiting commercial mining within the ecologically sensitive conservation area. Sagarmatha Iron, which holds a lease for iron excavation at Phulchoki, has faced difficulties navigating policy hurdles and the legal restrictions imposed by the court.

Systemic Issues Hamper Production

The delays across these projects underscore systemic issues hindering Nepal’s productive sector, including environmental concerns, local obstructions, infrastructure deficits, and inconsistent policies. These factors have contributed to a gradual shift towards an import-dependent economy and erosion of domestic production capacity.

The government has recently begun efforts to reopen closed industries and is now urged to prioritize the extraction and utilization of Nepal’s natural resources to boost domestic production and reduce reliance on imports.

(With inputs from RN)

Originally published on abcnews.com.np.