Krishna Prasad Kafle

Mines Expert &

Former Superintendent Geologist, Department of Mines and Geology

 

We are lucky to have so much mineral deposits in such a small territory. But we have failed to cash on this wealth because this sector failed to receive the government priority and attention. And as a result, the private investors were not attracted to it. Perhaps it can be attributed to the failure of the Department to give the required publicity about the mineral potentials of the country.

 

How is the situation of the mineral resources in Nepal?

 

During the Rana period, minerals like iron, copper, cobalt, lead, zinc were mined in different places. It was a compulsion to operate these mines as there was no other way to get such minerals in Nepal. Charcoal was used as the fuel to heat the ore to extract iron and copper from the ore. Such metals were used for making household utensils and farm implements. Iron extracted from Thoshey mine of today’s Ramechhap district was used for making gun barrels by the then government. Historical records show that nine barrels were produced in a day. The remains of the factory and traces of mine excavation can still be found there. Similarly copper and lead were mined in Baglung, Gulmi and Myagdi, and cobalt was mined in Arghakhanchi and Gulmi. Copper is available in many places. Copper mines of Marma, Khandeshwori and Siddhi Khani in the eastern Nepal are some of the well-known ones. In Myagdi and Baglung a lot of work was done on mining. Bhainse and Pandav mines in Myagdi district are a few examples. However, they were all in small scale. The studies in the course of 50 years by the Department of Mines and Geology have identified various minerals found in Nepal. Among them, some may not be viable to mine commercially at present but have possibility in the future when the price of such minerals may increase. As more studies are conducted and technology becomes cheaper, we may go ahead with excavation for such minerals.

 

What have these studies found about the estimated size of mineral deposits in Nepal?

 

The deposit size differs for different minerals. If you look at the iron mine of Fulchowki of Lalitpur, it is around 10 million tonnes. Similarly Thoshey mine has around 16 million tonnes of iron as per the estimate by the Department which is supported also by the study made by a new mining company interested in this mine. The Department has located lead, zinc, copper in different places. In non-metallic segment, limestone, used as basic raw material for cement industry, is found in huge quantity. A deposit of 1.25 billion tonnes of limestone has been proved and places have been identified with probable deposit of 1.50 billion tonnes. Based on these data, 29 licences have been issued for limestone excavation and 196 licenses for limestone exploration. Hetauda Cement, Udayapur Cement, Himal Cement and Annapurna Cement are the examples of the cement factories that are utilising the Nepali limestone.  Now additional cement factories are set up or are being set up in Dang, Salyan and Rolpa utilising the limestone mines there. In Arghakhanchi, Dynasty Cement Company is already in operation. In Udayapur and Hetauda, new factories based on Nepali limestone mines are coming up.

 

Now many cement factories are using clinker imported from India. Currently 40 to 50 per cent of Nepal’s cement demand is supplied by local factories. As the new infrastructures are being set up in the country, the demand for cement is going up in the similar speed. So, cement industry have good prospects in Nepal. This increased demand can be met by cement produced in Nepal with Nepali limestone. Thus Nepal can be self-reliant on cement with the available limestone deposit.  Gypsum is the other mineral required for cement production. Though that is not found in a large quantity so far, there is possibility to find it. Explorations and studies must be continued. Other minerals required for cement industry are coal and iron. Both of them are available in Nepal. If government issues licence and no local problems arise, Thoshey mine can supply the iron to Nepali cement industry. Gypsum can be imported from Bhutan and India. There is possibility to find it in the area around Pyuthan, Dailekh and Surkhet.

 

Then why could not Nepal cash in this wealth so far?

 

We are lucky to have so much mineral deposits in such a small territory. But we have failed to cash in this wealth because this sector failed to receive the government priority and attention. And as a result, the private investors were not attracted to it. Perhaps it can be attributed to the failure of the Department to give the required publicity about the mineral potentials of the country. The government has issued 451 licences for exploration of minerals and 80 more licenses are issued for excavation. Recently, the awareness about the importance of this sector is growing.

 

People say that though the types of minerals found in Nepal is very large, the size of the deposits are so small that it is not economical to mine them. What is the exact situation?

 

When we were studying a copper mine in Dadeldhura, we found gold, copper, tungsten, nickel, molybdenum, bismuth and even cobalt from the same mine. It is a poly-metal sulphide deposit which can be used as multi mineral mine.  The tendency is such that we look for a certain mineral and when we notice that the deposit size of that mineral is not economical, we leave that site without trying to explore about the presence of any other mineral there. There was a UNDP project conducted to explore minerals in Nepal and that too concentrated only on copper, lead and zinc, which are called base metals. If the project had explored for other minerals as well on the same mines that would have yielded significant benefits.

 

Places like Myagdi, Baglung, Parbat, Gorkha, Solukhumbu and Ilam have mineral deposits. Gemstones are available in Sankhuwasabha, Dhading, Rasuwa, Jajarkot, etc. Different places are suitable for different minerals. The minerals are scattered all over, from the mountains to the Terai. We have failed to make a commercial use of them. Had we utilised them in time, we would have made tremendous economic progress already. For example, the best high-grade magnesite deposit of South Asia is in Dolakha district. But unfortunately we failed to excavate it on time and take it to the market. With scientific advancements, even the medium grade magnesite has now become as good as the high-grade. As we don’t have internal market for dead burnt magnetite bricks, we have to export it to other countries where such bricks are used in industrial units that have high temperature furnaces. Such bricks can resist up to 2300⁰ Celsius temperature while normal bricks can’t resist more than 700⁰ Celsius.

 

What about other minerals such as gold?

 

The gold deposit in Nepali mines is very small. However, gold is priced very high. Therefore, though the quality of gold that can be mined in Nepal may be small, its value is high. Therefore, even if the deposit of this mineral is small, it can be economically beneficial to mine. Our rivers like Karnali, Chamelia, Seti, Bheri, Budhi Gandaki, Marsayangdi and Kali Gandaki have gold in their sands. Local fishermen search for gold ore in these rivers and sell it in the market. Such ores have 60 to 99 per cent of gold. Precious metals and precious stones like ruby, sapphire, tourmaline, aquamarine are highly priced. Therefore, though they may be in small quantity, their value is high and it is economical to mine them. Metals like gold, iron, copper and zinc have their own value. They are found in Nepal and have a good market.  But in the absence of proper mining, most of them are wasted. The local people have a tendency to blast the mine. By doing so, some quantity is extracted, but the big pieces of the stones get destroyed in this process. They are doing so because they don’t know the proper method of mining. If they hire an engineer to help them mine it properly, it can give them better results. We have mines from small to medium size. We don’t have mines as big as the ones in Australia, China and Canada. In non-metallic segment, we have big limestone deposits.

 

What kind of possibilities you see for the contribution of mines and minerals sector to the economy?

 

At present, the contribution of mines and minerals to the country’s GDP is estimated at around 0.4 per cent. This goes up to 2.4 percent if we consider mineral-based industries as well. If we utilise our resources properly, we can increase this to 15 per cent within a decade. This is only by utilising the identified mineral locations. If new ones can be found, the benefit will surely go up.

 

What do you suggest to address the environmental issues that crop up with mineral exploration?

 

That reminds of Godavari Marbles. The company was doing well.  It had market in Bangladesh and India. But the locals and environmental activists did not allow the mine to function properly. You cannot take out the minerals without digging up which may damage the environment. However, there are ways to minimise the damage. Moreover, though the environment is damaged when the digging is going on, the location can be rehabilitated and the damage replenished once the digging is completed. The mine can be rehabilitated by tree plantation, herbs farming, horticulture or building a resort. In some cases, it is possible to do the entire exploration as well as processing under the ground so that the noise and dust pollution can be minimised. Or the digging can be under the ground and the raw mineral can be transported through tunnels to a far-away location for processing. However, it is not possible to avoid some environmental damage as the opening to the mine is naturally over the ground.

 

How is the commercial viability of petroleum mine and, metallic and non metallic mines?

 

The geological structure and study reports suggest the possibility for petroleum at different locations of Nepal. Oil migrates from one place to another if it can’t get tapped properly.  On the basis of studies by the Government and foreign companies, Nepal’s Terai including Churia region is divided into 10 different blocks for petroleum exploration. Shell Netherlands drilled about 3.5 kilometres on the block No. 10 a few years ago and found it dry. Then the company left Nepal. Now Cairns Energy, a British company and Texana Resources, an American company are doing preliminary works like reassessing, evaluating the existing data, and analysing samples but they are not doing it in full scale. Seismic survey has to be done. Then blasting may be required in some places. And wires have to be laid extensively. But it is not possible to do all these at the current political situation of the country. So they are idle. The government has already received back what it has spent on these studies. The government has charged these companies around Rs 200 to 220 million. Among the 10 blocks, five blocks are taken by Cairns Energy and two by Texana.

 

Oil is being extracted in Assam in India and Potwar of Pakistan since 1970s. As Nepal lies in the same geographical belt, there must be petroleum in our country too. But we have not found it yet. So we can’t guarantee the presence of petroleum yet. In Dailekh we can see the petroleum seepage. Similarly, in Trans-Himalayan region too, we find traces of gas. That shows the possibility of petroleum gas.

 

Which minerals should get priority in exploration and excavation in Nepal in your opinion?

 

Among the precious metals, gold has to be prioritised and on base metals, copper, nickel and cobalt must be given attention. On non-metals, limestone, magnetite, dolomite, phosphorite and talc have to be given top priority. As these minerals have good prospects to be found and there is international market as well in these, we should explore them also in new places.

 

The government should increase its budget in mining sector. In the last fiscal year, Rs 20 million was collected by the Department of Mines through licensing. But the projects under it get only around Rs 3 to 3.5 million as their budget which is too little.

 

There is a controversy going on in the mining of sand and stones. As a mining engineer, what is your take on it?

 

Rivers bring down sediments from the hilly region and deposit them on the plain areas where the water current is weak. It is a continuing process. If such sediments are not dug out it brings problem. It lifts the river bed and increases the risk of flooding. But extraction of such sediments must be sustainable and balanced. You should not take out more than what the river has brought down from the hills. The problem at present is that in some places these sediments are extracted extensively while at some places nothing is taken out. At some places, walls are built to save settlements from flooding but sands and stones are extracted even from the foundation of such walls. That is haphazard mining. There must be a mining engineer and a geologist in every Village Development Committee and District Development Committee so as to properly mobilise the resources.

 

What are the minerals in which the private sector has shown some interest recently?

 

Recent report of the Department shows there are 80 licensed mining companies. Some of them are in operation. Most of them are on limestone, coal, red clay, slate, magnesite and on semiprecious stones like kainite, tourmaline, marble and quartz.  The licenses already issued cover 12 minerals.  And the trend is growing. 

 

What are the biggest challenges and problems in utilising the hidden treasure called mineral resources of Nepal?

 

Minerals are mined, so they are also called hidden treasure. However some minerals are found on the surface as well, e.g. the boulders. The biggest problem is that the Mines and Minerals Act, Forestry Act and Local Self-governance Act have contradictory provisions.  Forest authority imposes tax on everything in the forest while mining authority says the mines, even within the forests, are under the mining authority. On the other hand, the District Development Committee and Village Development Committee come up and say they have the right over the mine area within their locality. So, the miner ends up paying taxes to all these different authorities. The solution is to adopt one-window policy for tax collection. Three ministries should coordinate and make mining easy. Investors will pay tax when they generate income. Before that they generate employment.  So they must be encouraged. If 10 cement factories produce 1000 tons of cement daily, they jointly create employment for 10 thousand people directly and another 20 thousand indirectly. That will have multiplier effect.

 

What kind of market prospects do you see if the minerals can be extracted?

 

The magnesite bricks will not be consumed in our country; not even five per cent.  We have to search for international market. Surface transport costs much, so we cannot compete with other producers of magnesite.  Therefore, we have to export it even though we have to provide special subsidy in its transport cost. Priority should be given to the minerals that can be used within the country, so that the import can be reduced and the trade deficit can be reduced.  We can make good money if we export sand and stones to India and Bangladesh on time. Iron ore can be used within the country by the cement factories and iron mills.  Other metals and precious stones have market everywhere in the world.

 

Which five minerals would you like to specify as having the maximum commercial potentials?

 

Limestone is the most prominent. Then it is talc. Similarly important is magnesite as its mine operation is not difficult. If plants can be made and products taken to market, it has huge prospects. Only problem is of the fuel. A lot of coal is required. Kathmandu has natural methane gas reserve of 320 million cubic metres. It must be brought to the market. Precious and semiprecious stones, high priced metals and base metals must be highly prioritised.

 

It seems that the mineral sector studies are very few and difficult to find. Why is it so?

There are a number of research activities carried out, but not on the desired speed and scale. The problem is that the study reports are not made available to the public in a manner that makes them easily accessible to all those interested on it, by paying reasonable fee. This is essential to attract investors. About 60-65 minerals are said to be found in Nepal. Economic viability of such minerals has been changing over the time. For example, once gold was available in Kathmandu for Rs 9 to 10 thousand per 10 grams. That time, the Nepali gold mines were naturally uneconomic. Now that the gold price has increased to Rs 30-40,000 per 10 grams, the same mines may be economical. An authority should be designated to make the decisions regarding which mine should be brought into operation and which to keep on hold.