JAKARTA (TheInsiderStories) - Publicly listed state own cement producer PT Semen Indonesia TR) and local company PT Samana Citra Agung set up a joint venture company, called PT Semen Indonesia Aceh to expand the capacity production.
The cement plant will be built on 1,500 hectares of land in Batee and Muara Tiga sub-districts, Pidie Regency, Aceh Province. The agreement was signed by Chief executive of Semen Indonesia Suparni, and President Director of Samana Citra Agung Deni Fahlevi
Suparni explained, the establishment of new plant in particular to meet growing demand for cement in Sumatera areas such as Aceh, North Sumatera, Riau and Riau Island provinces. He continued, both parties have agreed to invest a total of Rp5 trillion ($383.3 million) to build the new cement plant with capacity of 3 million tons per annum.
According to Finance Director Ahyanizzaman, Semen Indonesia need investments Rp7 trillion this year to finance the expansions including new cement plant in Padang at West Sumatera, Rembang in Central Java, Tonasa in South Sulawesi and Kupang in East Nusa Tenggara with a total capacity 11.5 million tons.
“We expect in the next five years our capital expenditures (capex) is estimating between Rp4-5 trillion per year. For this year’s capex we will likely to drawdown of bank borrowing around Rp2 trillion and the rest of it from internal,” He said.
Semen Indonesia is the holding company of PT Semen Padang, PT Semen Gresik, PT SemenTonasa dan Thang Long Cement Vietnam with combined capacity of 31.8 million tons of cement per annum with domestic market share of 43 percent in 2015. In addition to have cement plant, it also operates 22 units of cement mill, 26 units of packing plant and 11 owned ports.
The country’s largest cement maker and PT Semen Kupang are planning to build a new cement factory in Kupang, East Nusa Tenggara with a total investment of Rp 2.5 trillion. The new plant will have a capacity of 1.5 million tons annually.
The new cement plant needs 2.5 years to develop after the ground-breaking ceremony commences in 2016 as part of Semen Indonesia’s strategy to capture eastern Indonesian market. Suparni said around 40 per cent of the new cement plant output will be exported.
In 2016, the company expects to have a market share of around 40 per cent of the national cement production that estimated to reach 75 million tons. Meanwhile, the Indonesia Cement Association has predicted that the national sales of cement will reach 68 million tons this year.
Domestic consumption is predicted to rise by 6 per cent next year, from the current growth of only 1 per cent. Semen Indonesia expects to sell around 29 million tons in 2016 through revamping and de-bottlenecking programs.