The Bhutanese Leading the way.
While the economy is expected to grow strongly in 2025, with the ADB projecting an 8.5% rise in GDP, the ferro alloy industry is facing challenges due to global uncertainty and local issues.
Despite the positive economic outlook, some ferro alloy producers say they are not benefiting as much as others.
There are currently eleven ferro alloy industries operating in the country, including Bhutan Ferro Alloy Ltd., Bhutan Carbide & Chemicals Ltd., Druk Ferro Alloys Ltd., Druk Wang Alloys Ltd., Pelden Enterprise Limited, Samdrupling Metals Pvt. Ltd. (formerly Kingyal Coke & Chemicals), Bhutan Silicon Metals Pvt. Ltd., Tashi Metals Pvt. Ltd., SD Ferro Alloys, Ugen Ferro Alloys Pvt. Ltd. and Chukha Ferro Alloys Pvt. Ltd.
The Bhutanese talked to many of the ferro alloy industries and all of them say the sector is not doing well.
A ferro alloy owner said that the sector’s performance has weakened, with profit margins dropping to nominal levels. A strong contributor to Bhutan’s industrial exports, especially ferrosilicon, used in steelmaking, the sector is now facing a combination of global market weakness and domestic operational pressures.
“The industry is not doing as well as it used to,” said another ferro alloy operator. “The global market is disturbed and uncertain, particularly due to geopolitical tensions and wars affecting the European market and since our main buyer is India, and demand from the Indian steel sector is currently weak and it’s proving to be a difficult time for our industry.”
The ferro alloy industry is highly exposed to international demand cycles, especially in steel production. The post-COVID rebound has been uneven, and while producers benefited during the pandemic due to stable exports, current global uncertainty, including conflicts in Europe and subdued demand from major buyers like India, has made the market volatile.
There are domestic issues faced by the industries, most notably electricity tariffs. “Electricity costs have gone up at a time when international demand is already weak,” said another ferro alloy producer. “That’s a double hit for us.”
The ferro alloy sector had a booming time before the pandemic declaring huge dividends and was and still is easily Bhutan’s top export item.
After the pandemic the sector had its best year in 2022 when prices went up due to increased demand and production in other places hit by supply chain disruptions. However, there has been a subsequent slowdown in 2023 and 2024 due to a sluggish demand from the steel industry.
Given the past profits many decided to invest in this sector making huge investments and taking huge loans.
Norbugang area in Samtse is expected to host 11 or more ferro alloy factories with 187 acres earmarked Following the closure of the Jigmeling Industrial Park to such industries, due to its inclusion in the Gelephu Mindfulness City (GMC) project, seven of the originally planned eight factories have relocated to Norbugang.
An additional project has since been added, bringing the total to eight. Of these, five are in advanced stages of development, while the remaining three have begun initial activities such as land preparation and infrastructure work.
The Department of Industry also plans to allocate three more plots in Norbugang, with eight companies currently in the application queue. However, these allocations depend on whether the Ministry of Energy and Natural Resources can confirm adequate power supply for the new factories.
Infrastructure development in Norbugang is projected to cost approximately Nu 3.6 billion—Nu 1.6 billion for roads and water systems, and Nu 2 billion for electricity infrastructure.
One of the key challenges facing the industrial park, similar to the existing industries, will be securing sufficient power during the winter months, which could remain a constraint unless additional power generation projects are initiated.
It also remains to be seen if these new ferro alloy factories coming up can be profitable or navigate the market slump like the current factories.
Despite these challenges, some in the industry maintain a level-headed view, recognizing that cyclical ups and downs are part of the game.
“Our performance right now is okay,” said a representative from another ferroalloy firm.
They said that they did very well during the COVID period when the global supply chains were disrupted, and now they are adjusting to the current demand slowdown. They said that this was normal in this line of work.
