Semen Indonesia expands operations

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Asia: PT Semen Indonesia's subsidiary PT Semen Padang has commenced construction of its US$279.5m Indarung VI cement plant in Padang, West Sumatra on 26 May 2014. The new plant, which has an annual cement production capacity of 3Mt/yr, is expected to commence operations in the second half of 2016.

"We are developing the Indarung VI factory as the demand for cement keeps increasing across Sumatra and western parts of Java," said Dwi Soetjipto, CEO of PT Semen Indonesia. With the operation of the new plant, Semen Padang's total cement production capacity is expected to increase to 10.5Mt/yr, up from 7.5Mt/yr.

Brisk development of property, toll roads, and other infrastructure projects has pushed up demand for cement in East Java. "Demand for cement in the country has increased. All cement production is absorbed by the market for government and private properties and infrastructure projects," Bambang Djoko claimed. The commercial director of PT Semen Gresik Aunur Rosyid said that cement sales in West Java reached 2.83Mt in the first four months of 2014, an increase of 9.8% from 2.56Mt in 2013. "The growth exceeded the 3.7% growth of cement sales nationally in the same year," said Rosyid.

Elsewhere, PT Semen Indonesia has announced that it may acquire a cement plant in Bangladesh as part of its efforts to expand business. Soetjipto stated that the Bangladeshi cement plant has a production capacity of 0.60 – 1Mt/yr.

"We are now in the process of approaching the management of the plant for further negotiations. Hopefully, it can be realised in the coming six months," Soetjipto said. He was reluctant to reveal financial details, saying that the acquisition value was less than that made for Thang Long Cement in Vietnam. In November 2012 Semen Indonesia acquired 70% of Thang Long Cement (worth US$157m) from Geleximco.

Soetjipto also disclosed that Thang Long Cement will build a new plant in Rembang, Central Java in June 2014. "We will begin the construction of a new plant in Rembang in mid-June 2014," he remarked. He explained that with the development of new factories in Padang and Rembang and upgrades to the existing plants, Semen Indonesia will have a combined production capacity of 40.8Mt/yr by 2017.

PT Semen Indonesia hopes to boost its sales in Vietnam by expanding the production capacity of its Vietnamese subsidiary Thang Long Cement. " Thang Long Cement's market share in Vietnam is relatively small at around 2.3Mt/yr, but its market potential is huge," said Thang Long Cement executive Bambang Djoko.

Last modified on 28 May 2014

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