The Ministry of Industry (MoI) is making efforts to re-open Nepal Orind Magnesite which used to operate a magnesite quarry at Lakuri Danda in Dolakha district. The mine, which is located  102km to the east of Kathmandu, has remained closed for the last 12 years.

The ministry plans to submit a proposal to resurrect the company to the Cabinet within the next two months. Under this scheme, the government will hand over the company’s management to the Khetan Group, one of its shareholders. 

“The government is committed to re-opening the company at the earliest possible. We have all the three requisites — magnesite, a factory that can be revived and the necessary manpower,” said Industry Minister Karna Bahadur Thapa who had been to Dolakha to observe the factory and the mine. “I have directed the officials to work swiftly to ensure that the proposal can be sent to the Cabinet in the next two months.” 

Meanwhile, Krishna Gyawali, secretary at the MoI, said that the Khetan Group would be injecting Rs 120 million to bring the moribund company back to life. “Since the Khetan Group is one of the prominent stakeholders, we are planning to give them a chance to operate the factory,” said Gyawali, adding that the government would not be involved in its management. “The government will definitely regulate the operations. But it won’t be there in management itself.”  

The magnesite quarry at Lakuri Dada in Dolakha contains an estimated deposit of 18 million tonnes. The deposit is projected to last 100 years. The factory is situated in Makha of Sindhupalchok district. Magnesite is used in the production of refractory bricks for kiln lining, fused magnesia, magnesium metal, fertilizer, animal feed, medicine and industrial chemicals, among various other items.   

A preliminary report prepared by the ministry has proposed that the Khetan Group provide 5 percent of its earnings to the company for the first two years after beginning commercial production, 10 percent for the next two years and 15 percent for the next three years. After the Khetan Group has recovered its investment, it will provide 50 percent of the earnings to the company for a designated period. “We are yet to decide the designated time frame,” said Gyawali.

A report prepared by the ministry has stated that Khetan Group will break even in seven years. It has projected that the factory will produce 22,500 tonnes of dead burnt magnesite (DBM), 42,000 tonnes of CCM and 10,500 tonnes of talc from the start of operation. In terms of earnings, the report has stated that the factory will earn Rs 64.84 million from sales of DBM, Rs 58.21 million from sales of CCM and Rs 10.19 million from sales of talc, adding up to Rs 133.25 million in seven years. 

Gyawali said that it was necessary to do market research before jumping into production recalling that the government had been forced to stop operations as Nepali products were uncompetitive in the Indian market due to cheaper and higher quality products from China. 

At the time of its closure in 2001, the company was providing employment to 520 people. According to Dinesh Bhattarai, executive director of Orind Magnesite, the company had shut down mainly due to technical problems and lack of competitiveness as compared to products from China. “If the factory is re-opened, we will make sure that these issues are sorted out,” said Bhattarai, adding that if the factory was revived, it would provide jobs to 800 persons.    

The factory was established in April 1979 with the objective of producing dead burnt magnesite as per Harbison Walker’s Technology and talc powder. The factory has a production capacity of 50,000 tonnes a year. However, it has not been producing dead burnt magnesite, but has only been producing talc powder. 

According to the Annual Performance Review of Public Enterprises 2013, the factory’s net worth is negative by Rs 3.33 billion, and it incurred a net loss of Rs 118 million in 2011-12. It owes Rs 1.11 billion to the government and Rs 250 million to banks and financial institutions in principal and interest.