Semen Gresik Cement Seeks Approval For Plants in Sumatra, Java

Jakarta Globe - 27/05/2012

Semen Gresik, the country’s largest cement maker, plans to spend almost Rp 7 trillion ($756 million) to build new cement plants in Sumatra and Java this year, a top executive said on Friday.

Cement companies are rushing to add production as they seek to take advantage of the country’s expanding economy and government plans to pour money into updating and expanding an inadequate infrastructure network.

Dwi Soetjipto, president director of Semen Gresik, said the new plants were part of the company’s growth plans. “We will add the plants to directly support the production process, or the core business of the company,” he said.

Semen Gresik will seek a bank loan to finance the construction of the plants, he said, adding that another option was a bond sale.

Dwi said the company would seek shareholder approval on June 26 for the construction of the plants.

Semen Gresik’s finance director, Ahuanizzaman, said this month that the company was also planning to build a cement plant in Burma, where the local industry can only meet half of the domestic demand there.

The company estimated the cost of the Burma plant — with a production capacity of about 600,000 tons per year — to be around Rp 1 trillion.

The company said construction of the plant might start next year and be completed in three. It is also looking for a local partner in Burma.

Cement sales in Indonesia rose in the first quarter from the same period a year ago, suggesting growing demand from property and construction companies.

Industrywide, sales jumped 18 percent to 12.5 million tons in the January-March period, cement maker Semen Gresik reported, citing data from the Indonesian Cement Association (ASI).

Cement sales, along with vehicle and motorcycle sales, are leading economic indicators in Indonesia. Rising cement and vehicle sales suggest the Indonesian economy will remain strong.

Semen Gresik and other cement makers in the country plan to invest a total of Rp 57 trillion in the next three years to boost production. The investment is expected to produce an additional 30 million tons of cement each year in the country, with annual output reaching 90 million tons in 2017.

Total production by the country’s cement makers was 52 million tons last year.

Shares of Semen Gresik fell 3.52 percent to Rp 10,950 on the Indonesia Stock Exchange on Friday.