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Mineral Resources of Nepal

Pranit Kushwaha
Kathmandu College of Management
Sajag Rana
July 7, 2021
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Table of Contents
 Acronyms

 Abstract

 Introduction

 Mining History
 Present Status of Mines and Mineral Deposits
 Mineral Production
 Import of Minerals
 Export of Minerals
 Contribution from Mines and Minerals
 Major Issues
 Conclusion
 References
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Acronyms

DMG Department of Mines and Geology

FY Fiscal Year

GDP Gross Domestic Product

GoN Government of Nepal

LDC Least Developed Country

IBN Investment Board Nepal

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Abstract

This paper explores the current state and utilization trends of Nepal's mineral resources.

Mineral resources play an important role in the development of the economy, industry, and

gross domestic product (GDP). Mineral resources, on the other hand, are unevenly distributed

across geographical regions. Furthermore, some minerals are deposited on a tiny scale at a

specific location. As a result of the absence of extensive research, Nepal has been unable to

utilize mineral resources. To determine the number and quantity of mineral deposits in a given

location that may be mined for commercial purposes, a detailed investigation is required. It

demands clear policy actions and provisions outlining roles and duties in the proper

mobilization of natural resources in both the public and private sectors. Mineral resource

commercialization aids import substitution, industrial development, employment generation,

and revenue collection.

Keywords: Minerals resources, exploration, deposition and investigation

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Mineral Resources of Nepal

The concept of resources is entirely functioning, and it is closely linked to human wants

and capabilities. Nature provides opportunities for humans to demonstrate their abilities and

use their knowledge. This is the most important because it is the source of all other resources.

Human beings are the most dynamic producers as well as the beneficiaries of the entire

resource creation and consumption process. Mineral resources are a type of resource that has

been used to meet human requirements from the beginning of time. Exploitation and effective

use of such valuable resources, are key for the country's economic development.

Minerals are the naturally occurring inorganic solids considered as hidden treasure of

country. Sustainable development of such resources is crucial for industrial development, job

creation, reducing reliance on imported goods and services, saving foreign currency, reducing

trade deficits, strengthening the country's economy, and contributing significantly to national

GDP. Despite the fact that Nepal is designated by the United Nations as a least developed

country (LDC), the government's goal is to graduate from this category by 2022 and transition

to a middle-income country by 2030.

The government of Nepal has initiated mineral exploration activities after the

establishment of Department of Mine and Geology with the financial support of Mineral

Exploration Development Project (MEDP) (Kaphle, 2013). The policy initiatives are ineffective in

terms of studying, excavating, and properly utilizing mineral resources. As a result, Nepal's

mineral resources are insufficient to meet the country's economic needs. Let us study the

current state of mineral resources in Nepal, as well as their potential for development.
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Introduction

Nepal is located in the heart of the Himalayan belt, which stretches over 2500

kilometers. Mountainous terrain covers over 83 percent of Nepal's land. It is a landlocked,

undeveloped country positioned between China to the north and India to the south. Nepal has

a wealth of natural resources, including minerals, water, forest, medicinal herbs, and a wide

range of agricultural products. Exploitation and appropriate use of such precious resources,

particularly mineral resources, are critical for the country's economic development. Metallic,

nonmetallic, and energy/fuel mineral reserves, as well as a large quantity of construction

materials, dimension, and ornamental stones, are all suited for the mountainous terrain and its

geological environment.

Sustainable development of such resources is critical for industrial development, job

creation, reducing reliance on imported goods and services, saving foreign currency, reducing

trade deficits, strengthening the country's economy, and contributing significantly to national

GDP. In 1977, the Government of Nepal (GON) merged the two departments Nepal Bureau of

Mines and Nepal Bureau of Mines and renamed it the Department of Mines and Geology

(DMG).

Over 550 private investors have showed interest in mineral exploration and mining

activities in the previous few years. Mineral exploration activities by the DMG and the private

sector are ongoing, but at a steady pace due to a lack of infrastructure, trained technical

manpower, suitable mining equipment, unavailability of raw materials, haphazard mining

activities, environmental issues raised by local people, and contradictions in the Mines and

Mineral Act, Forest Act, and Local Governance Act related to ownership of natural resources.
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Mining History

Indigenous mining has been practiced in Nepal for over 200 years. Various slate,

quartzite, dolomite, and limestone quarries were functioning in many districts, as were small

scale historical iron, copper, lead, zinc, cobalt, nickel mines and placer gold panning in the

major rivers. Old working pits, adits, smelting sites, scattered slag, and remnants of mine

materials are all evidence of past mining activities. In many cases, the village name is taken

from the name of the mine, such as Taba Khani, Falam Khani, Shisa Khani, Sun Khani, and many

more.

Nepal was a major supplier of iron and copper to Tibet, as well as cobalt to India, before

to 1951 (2007BS). In 1921, at Thoshe Megchan in Ramechhap, a gun factory based on the

Thoshe iron deposit was created (Rana, 1965). Its remnants can still be found there. However,

after the government changed in 1951, such mining activities were gradually phased out due to

a shift in the new government's policy, a lack of charcoal for smelting, and technical difficulties

in mining at depth, among other factors. As a result, DMG or private sector review and

evaluation of such deposits/mines is highly recommended for further exploration and mining.

The Thoshe iron deposit, for example, was appraised by DMG and then extensively

explored by N & C Minerals Pvt. Ltd. It has prepared a mining plan and obtained a mining

license from DMG, but it is still unable to develop and exploit the iron ore due to numerous

complexities in obtaining permission from the Department of Forest, a lack of infrastructure,

central and local government support, a large amount of investment required to purchase

mining equipment, and the hiring of highly trained technical manpower.

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Present Status of Mines and Mineral Deposits

Since its beginning in 1961, DMG has been primarily responsible for geological

investigations and mineral exploration activities and partly by DMG/ UNDP projects (1969-

1972), UNDP/ DMG/MEDP projects (1974-1978), and Geological Survey of India (GSI, 1964-

1968), as well as a few private entrepreneurs, were successful in identifying metallic,

nonmetallic, and fuel mineral deposits/ prospects/ occurrences and categorizing them as

economic, subeconomic, and noneconomic deposits of more than 66 mineral commodities in

Nepal.

DMG is likely to enhance mineral-based enterprises such as cement, agri-lime, marble,

talc, dead burnt magnesite, zinc-lead, coal, gemstones, and so on, based on some profitable

deposits. After acquiring licenses from DMG, a few small to medium scale mines of limestone,

magnesite, marble, talc, coal, peat, clay, salt, mica, quartz crystals, semiprecious and precious

stones, dimension/paving stones, and roofing slates are in operation by private companies.

There are around 48 limestone quarries that supply limestone to the cement industry. There

are seven gemstone mines, one iron mine, and a few talc, coal, marble, and dolomite mines in

operation.

DMG has already discovered a 310 million m3 methane gas reserve in Kathmandu

valley. In Tripureswor/ Teku, there is a replica of a gas plant. The gas can be used for industrial

and domestic purposes, according to the feasibility study, and the resource is sufficient to give

gas to 21000 families for roughly 30 years (GoN,2011). Petroleum and Natural Gas, a number of
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Oil and Natural gas seeps are recorded in stretch of about 14 km in Padukasthan, Sirsesthan

and Navisthan area in Dailekh andonly gas seeps in Muktinath in Mustang. Since 1982, the

Government of Nepal and the DMG Petroleum Exploration Project (PEPP) have given significant

attention to exploring and promoting petroleum exploration in Nepal.

Mineral Production

Figure 1:Mineral Production

The production of mineral peaked in the year 2009 i.e. 34,601 metric tons and lowest of

3,400 metric tons in year 2015 (CEIC,2019). The mining sector is unable to utilize the resources

and meet the target as only the minerals requiring less finance are mined and used in

production. like limestone is the mineral found highest in number in Nepal and is used for the

production of cement. It requires less financial resources, therefore, the number of cement

industries are high in number. The places reported to have the precious or important minerals

are still untouched due to lack of facilities. This has resulted in illegal mining, like Phakuwa is
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reported to have tourmaline which has high market rate. The mineral is illegally mined by the

local people in the area.

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Import of Minerals

Figure 2:Import of Minerals

Though, Nepal is rich in mineral resources, imports are made in high number. As an

example, Nepal imports 73% of its coal consumption though there are high number of coal

reserves in the country itself. The data reached all time highest in the year 2019 i.e. 25,618

million rupees and the number is significantly increasing every year (CEIC,2019).
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Export of Minerals

Figure 3:Import of Minerals

Talking about minerals export, the number reached its highest in year 2009 i.e. 41

million rupees. In 2017, Nepal government imposed restrictions on exporting of minerals in

order to meet the internal demands of country.

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Contribution from Mines and Minerals

According to DMG records, it issued approximately 365 and 388 prospecting permits

and approximately 121 and 142 mining licenses in FY 2074/075BS and FY 2075/076BS,

respectively. DMG has also collected royalties, various types of taxes, fees, surface rental of

leasing area, and other fees in the last two fiscal years, totaling Rs1,139,396,240 and

Rs770,323,724 respectively (DMG, Planning section). Furthermore, local governments earn

approximately Rs1,000,000,000 per year in local taxes and fees from river boulders, gravel, and

sand quarries in their domains.

Mineral resources and petroleum reserves can play an important role in industrial

growth, creating jobs for many jobless people, reducing imports and, as a result, reducing trade

deficits, raising the poverty line, and contributing to the national GDP. Minerals and mines

currently contribute only around 0.6 percent of national GDP, while the mineral industries

sector contributes only about 2.5 percent, which is not encouraging.

Geoscientists believe that if the GON focuses on exploitation of mineral resources,

develops all necessary infrastructure to access the deposits, follows a liberal policy and provides

incentives such as tax holidays for the first 3–5 years, and encourages them by providing

laboratory and technical support/advice to investors, within the next few years, they will be

successful. This sector might provide 15–20 percent of national GDP in this case.
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Major Issues

Foreign investors are discouraged from investing in various areas in Nepal due to a lack

of clarity in government policy regarding the development of mineral resources. Other issues

with mineral resources in Nepal include a low rate of capital formation, a limited market scope,

and a lack of interest from both the government and the general public. Some contradiction

between some clauses of the Mine and Mineral Act and Regulation, Forest Act and Regulation

and Local Self Government Act and Regulation (Forest Act, 1993 and Local Self Government Act

1999) have also put constraints in minerals exploration and exploitation. Many known mineral

deposits in the Himalayan and Sub-Himalayan regions remain untapped due to a lack of

infrastructure such as road access, energy, communication, and water supply, among other

things. Mineral exploration, mine development, and the construction of a mineral-based

industry typically require the infrastructures outlined above, therefore potential investors are

less interested.

There is also an absence of systematic geological understanding of the Nepal Himalayan

process. Furthermore, a key restraint in this subject is the lack of various types of geological

maps at various sizes, technologies and concepts for mineral discovery, studies in mineral

genesis, and the idea for exploitation of scattered deposits. The key issues in the exploration,

exploitation, and development of mineral resources in Nepal are a lack of advanced technology,

a lack of financing and investment, a limited market scope, improper government policy, and an

insufficient supply of energy.

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There is a difference in the position and exploitation of different types of mineral

resources. Some mineral resources, such as boulder, sand, gravel, slate, granite, and lime stone,

are in high demand since they don't take a lot of money to discover and exploit, whereas

others, such as energy and metallic minerals, are underutilized. The lack of a comprehensive

and detailed geological survey continues to be a major barrier to the country's commercial

mining exploration. As a result, Nepal has no large minerals of commercial significance as a

resource base at this time. Existing Acts and Regulations, such as the Forest Act of 1993 and the

Environment Act of 1997, as well as government programs and operations at all levels, have

overlapping rules and provisions when it comes to mining and mineral resources. These issues

must be handled in order for these resources to be used effectively for the country's economic

development.
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Conclusion

In Nepal, there is a difference in the position and exploitation of different types of

mineral resources. Some mineral resources, such as boulder, sand, gravel, slate, granite, and

lime stone, are in high demand since they don't take a lot of money to discover and exploit,

whereas others, such as energy and metallic minerals, are underutilized. The majority of data

on mineral occurrences in the country is still hazy. The lack of a thorough and complete

geological survey continues to be a major impediment to the country's commercial mining

exploration. As a result, Nepal has no large minerals of commercial significance as a resource

base at this time. Lead, zinc mines, iron ore and magnesites are among the metallic minerals of

medium economic importance discovered so far. These could be extremely beneficial to

development. Existing Acts and Regulations, such as the Forest Act of 1993 and the

Environment Act of 1997, as well as government programs and operations at all levels, have

overlapping rules and arrangements when it comes to mining and mineral resources. These

issues must be handled in order for these resources to be used effectively for the country's

economic development.

Finally, enormous government research and investment are required to seek and locate

mineral resources and exploit them for the country's prosperity and advancement. It is also

critical that the government take all necessary steps to guarantee that the procedure has a

minimal impact on the natural environment. In collaboration with province and municipal

governments, the government should develop an acceptable minerals policy. As a result, more

in-depth research in recognized locations, evaluation of specific deposits, and exploration in

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new geologically prospective areas could aid in the discovery of possible economic deposits of

diverse metallic resources in Nepal.

References

Poudel, D. P. (2019). Present status and utilization of the mineral resources of Nepal. Journal of
Geography, 85-96. doi:: https://doi.org/10.3126/ttp.v18i0.28009

Sah, R. B., & Paudyal, K. R. (2019). Geological control of mineral deposits in Nepal. Journal of
Nepal Geological Society, 58, 189–197.doi: https://doi.org/10.3126/jngs.v58i0.24604

Kaphle, K. P. (2020, May 15). Mineral Resources of Nepal and their present status. Retrieved
from Nepal Geological Society (NGS): https://ngs.org.np/mineral-resources-of-nepal-and-their-
present-status/

Office of the Investment Board. (2017). Mines & Minerals Sector Profile. Kathmandu:
Investment Board Nepal. Retrieved from https://ibn.gov.np/wp-
content/uploads/2020/04/Mines-Minerals-Sector-Profile.pdf

Mines & Minerals Act, 2042 (1985). (2018, October 30). Retrieved from Nepal Law Commission:
https://www.lawcommission.gov.np/en/archives/category/documents/prevailing-law/statutes-
acts/mines-minerals-act-2042-1985