Displaying items by tag: Semen Indonesia
Indonesia: State-Owned Enterprises Minister Rini Soemarno says that President Joko Widodo is expected to inaugurate Semen Indonesia’s Rembang cement plant in April 2017. Soemarno made the comments following a visit to the plant, according to the Jakarta Post. The inauguration of the plant is dependent on environmental clearance, which should be completed in April 2017. However, the plant has been the focus of intense protests by local farmers and both the Supreme Court and a local government ruled to shut down the plant.
Indonesia: Semen Indonesia’s sales revenue fell by 3% year-on-year to US$1.95bn in 2016 from US$2.01bn in 2015. Its gross profit fell by 7.4% to US$737m from US$796m. Its overall cement sales volumes remained stable at 28.9Mt although sales from its Vietnamese subsidiary rose by 10.9% to 2.59Mt and its domestic subsidiary Semen Padang saw its sales fall by 3.5% to 6.29Mt. Exports from Indonesia rose by 24.4% to 0.6Mt.
Despite its static cement sales in Indonesia, the cement producer has two new 3Mt/yr cement plant projects respectively underway. The Indarung cement plant in West Sumatra is scheduled for commercial operation in April 2017. The Rembang cement plant in Central Java remains suspended whilst the company seeks environmental clearance. The government revoked permits for the site in late 2016 and it has been the focus of protests. In addition, a 30MW waste heat recovery system at the Tuban plant is scheduled to start operation by the end of 2017.
Australia: Semen Padang, a subsidiary of Semen Indonesia, has started exporting cement to Australia. It delivered 22t of cement to Sydney on 21 February 2017 on the Meratus Minahasa V.1705S, according to the Jakarta Post. Commercial director Pudjo Suseno said that the shipment was made in response to demand from potential Australian buyers revealed at the end of 2016. The cement producer has previously sold exports to countries including Bangladesh, the Philippines and Sri Lanka. It exported 396,000t of cement and 90,000t of clinker in 2016.
Indonesia: The ground-breaking ceremony for Semen Indonesia’s new Kupang cement plant has been scheduled for 10 March 2017. The governor of East Nusa Tenggara, Frans Lebu Raya, told the Antara news agency that the preparation phase for the project had been completed. The new line will have a production capacity of 1.5Mt/yr and it will be situated in the Bolok Industrial District. The project has a budget of US$150m and it will take about three years to build. The new plant is a join-venture between Semen Indonesia and Semen Kupang. Both cement producers already operate cement plants in Kupang.
Indonesia: Farmers have blocked access to Semen Indonesia’s Rembang cement plant as part of on-going protests against the construction of the unit. Around 250 farmers protested at the site in support of a Supreme Court ruling in October 2016 and a local government order in favour of shutting down the plant, according to the Jakarta Post newspaper. The activists claim that activity has continued at the site.
However, Semen Indonesia denies that is has started operation at the plant saying that its workers are merely ‘taking care of its assets.’ The cement producer says it stopped construction soon after it received the governor's decision to revoke its permit. It added that it had spent US$337m on the plant and that it was 99% complete when the governor issues his decree. 3000 workers were also laid off at the same time.
Indonesia: Semen Indonesia has prepared US$449m to be spent on capital expansion upgrades in 2017 to support government infrastructure targets. The plan includes four cement plants with a total production capacity of 10.5Mt/yr, according to the Jakarta Post. The Rembang plant in Central Java and the Indarung VI plant in Padang, West Sumatra are in the final stages of construction. New plants in Aceh and Kupang are also being planned for completion in 2019 and 2020 respectively, although these projects will require additional funding. The cement producer is also planning to build two packaging plants in Bengkulu and Maluku and a 30MW waste heat power plant at its plant in Tuban, East Java.
Company corporate secretary Agung Wiharto added that Semen Indonesia has forecast a 5% rise in demand for cement in 2017 to 70Mt. This is mainly due to government plans to boost infrastructure development across the country.
Indonesia: Ganjar Pranowo, the governor of Central Java, is willing to shut down Semen Indonesia’s Rembang cement plant if the central government approves it. Ganjar made a statement in response to a protest staged by Rembang residents against the cement plant following a Supreme Court ruling in favour of the residents, according to Tempo magazine. He added that he has sought advice from the government including the presidential office, the Environmental Affairs Ministry and the Ministry of State Owned Enterprises. Ganjar has established a team to conduct a study and he has until 17 January 2017 to respond to the ruling.
Holcim Indonesia inaugurated a new cement terminal in Lampung last week. Unfortunately, the spectre of industry overcapacity haunts the country at present and the subsidiary of LafargeHolcim may be late to the party. The Indonesian Cement Association (ASI) has been publicly warning the government of overcapacity since the end of the summer. Its first line of action has been to lobby for restrictions on producer permits to slow the growth of new plants.
ASI figures show that cement sales in September 2016 fell by 3.3% to 5.64Mt compared to August 2016 due to lower residential sector demand. Domestic cement sales rose by 2.95% year-on-year to 44.7Mt in the first nine months of 2016 and the ASI expects sales growth of 3 – 4% for 2016 overall. Yet, the risk of overcapacity is stark. Cement production capacity has nearly doubled from 59.3Mt/yr in 2012 to 92.7Mt/yr in 2016 but demand is projected to only reach 65Mt in 2016, leaving a production oversupply of 27.7Mt. Regional consumption has fallen in Jakarta, Banten and West Java, particularly in the first two. Elsewhere, it has grown, particularly in Central Java, as well as Yogyakarta and East Java to a lesser extent.
Initial Global Cement Directory 2017 research places active production capacity at 66.3Mt/yr suggesting that the ASI may be exaggerating the risk of overcapacity. The additional c30Mt/yr capacity arises from plants that have been proposed, that are actually under construction or that have been mothballed. However, the ASI data should be more accurate as it represents the local producers. Either way, capacity is growing faster than consumption as can be seen in graph 1.
Graph 1: Cement consumption and production capacity in Indonesia, 2012 – 2016. Source: Indonesian Cement Association, Global Cement Directory 2012 – 2017.
Semen Indonesia, the country’s largest producer, reported that its revenue fell very slightly to US$1.4bn in the first nine months of 2016 and its net profit fell by 8.4% to US$215m. It blamed this on a fall in sales volumes and prices due to rising competition. The other large producers have said similar in the past. Indocement, the country’s second largest producer after Semen Indonesia, saw its revenue fall by 11.9% to US$837m in the first nine months of 2016 and its profit fell by 2.2% to US$231m. LafargeHolcim described the market as affected by overcapacity and ‘a difficult competitive environment.’
Back in May 2016 a feature on the predicament facing the Indonesian cement industry in the Jakarta Post suggested that producers were building new capacity despite the risks of overcapacity to win market share. Cement producers are about to find out whether this will work or not. Meanwhile it seems unlikely that the measures the ASI is suggesting will do much to alleviate the looming crisis. Still, on the positive side, it’s looking like a good time to buy cement as a consumer.
For more information about the cement industry in Indonesia view the first part of the Association of South East Asian Nations (ASEAN) feature in the October 2016 issue of Global Cement Magazine
Indonesia: Semen Indonesia’s cement sales volumes rose by 1.2% year-on-year to 12.4Mt in the first half of 2016 compared to the same period in 2015. Local sales rose by 1.6% to 12.2Mt but export volumes fell sharply by 20.1% to 0.19Mt. The decline in export sales was attributed to the Indarung cement plant in Padang province.
Cement consumption for the country as a whole rose by 3.1% to 29.5Mt for the first half of 2016, according to Indonesian Cement Association data. Increases in consumption were noted in most regions, with the exception of Kalimantan, where consumption fell by 16% to 2Mt. Notable increases in consumptions were recorded in Sulawesi, Maluku and West Papua. Overall exports of cement fell by 19.3% to 0.21Mt but clinker exports rose by 380% to 0.42Mt in the period.
Indonesia: Semen Indonesia is planning to spend up to US$100m in 2016 to buy foreign cement companies outside of Indonesia to grow its revenue, a company official has told Reuters. Agung Wiharto, the company's corporate secretary, attributed the move to local competition. He didn’t mention which countries the cement producer is considering. Semen Indonesia’s revenue fell slightly year-on-year to US$2.01bn in 2015.