Indocement Prepares Rp1t for Plant Expansion
Raras Cahyafitri, the Jakarta Post - 09/05/2012
Indonesia’s second largest cement producer, PT Indocement Tunggal Prakarsa Tbk, says it will spend more than Rp 1 trillion (US$109 million) this year on expansion projects.
Following the company’s annual and extraordinary shareholders meeting in Jakarta on Tuesday, director Kuky Permana said that one of the firm’s main projects would be the construction of a new cement factory in Citereup, Bogor, West Java.
The factory will have a production capacity of 4.4 million tons per year when complete. Indocement would also construct cement mills with a total capacity of 1.9 million tons per year, he said.
“The total investment in theCiteurep project will be $500 million. It is expected to be completed within 33 and 34 months. The physical work will begin in the fourth quarter,” Indocement’s other director Nelson Borch said.
Indocement is also in the final stages of feasibility studies for plans to construct another two cement plants in green-field areas in Central Java and outside Java.
“We cannot specify the exact location of a new plant outside Java yet. But, we have done research that explored many areas,” Kuky said.
The company is hoping to start the construction of two new cement plants in 2016 or 2017, after it completes the construction of the Citeurep cement plant in 2015.
The two new plants will each have an annual production capacity of 2 million to 2.5 million tons of cement a year. Indocement has estimated that an investment of $400 million to $500 million would be needed to construct the two plants.
Other projects to be carried out this year include the construction of ports in Samarinda, East Kalimantan, and Banyuwangi, East Java, in May. The port at Banyuwangi is expected to support the company’s distribution to Bali and Nusa Tenggara. The company is also studying the possibilities of developing another port in Pontianak, West Kalimantan.
Between $10 million to $15 million would be needed for the construction of each port, Borch said.
The domestic cement market saw significant growth in the first quarter of the year, when sales volume rose 18 percent compared to the same period last year. During the January to March period, Indocement reported a 24.9 percent increase in sales volume to 4.1 million tons, while its market share stood at 32.5 percent compared to 30.7 percent in the same period last year.
Borch attributed the significant increase in Indocement’s performance and the national cement market in the first quarter of the year to relatively low demand in the same period.
Indocement is hoping to report further growth in the second quarter of the year, with an expected increase of 18 to 20 percent in sales volume. Borch said that Indocement would perform a cost efficiency analysis and increase its selling prices between 6 to 7 percent.
Despite an increase in selling price, Indocement still expected to maintain a market share of 31.5 to 32.5 percent this year, he said.
Shares in Indocement (INTP) closed at Rp 18,450 on Tuesday, a slight drop of 0.54 percent compared to a day earlier.