JAKARTA (TheInsiderStories) – Indonesia’ cement producer, PT Indocement Tunggal Prakarsa Tbk (IDX: INTP) allocates higher spending in 2020 worth of Rp1.3 trillion (US$92.85 million) from this year, said the management on Tuesday (12/17). In 2019 the company prepared Rp900 billion.
Its CEO Christian Kartawijaya said, that the company increased the investment due to the better cement production of next year. He said the cement domestic consumption will increase by 3-4 percent next year as the recovery of infrastructure projects.
“The capital expenditure will be used to build a stone project in West Java which will supply cement and develop refuse-derived fuel (RDF),” he said.
He added the investment will not be spent to increase the capacity since there will be capacity additional from three cement producers. To date, Indocement has an adequate capacity of 24.5 million tons with 70 percent utilities.
Furthermore, in terms of sales, Kartawijaya predicted that it will be better than the industry’s flat projection. Until Oct 2018, the company booked sales of 1.85 million tons, increased by 3 percent from Oct 2018. While company booked sales of 14.65 million tons from January to October 2019.
In the industry scale, the Indonesian cement association estimated that domestic cement sales growth will only be around 3-4 percent supported by infrastructure and national strategic projects, rural development, and a million house programs from the government.
Besides, the cement exports were targetted to reach 7 million tons, up 23 percent from the 2018 results. This export still is a national industry choice to reduce the overcapacity that continues this year.
While, in 2018, Indonesia cement sales reached 75.2 million tons, up 8.6 percent from the previous year. A total of 69.51 million tons are sales in the domestic market and 5.7 million tons from the export market.
Reportedly, the cement exports surged 97 percent in 2018 to 5.7 million tons compared to the previous year of 2.9 million tons. This increase supported by the utilization of domestic cement factories which have an overcapacity of up to 30 percent.
Ministry of Industry previously stated that the cement industry performance was projected to be more attractive in 2019. This is due to the government’s efforts to create a conducive business climate in the country.
Director at the ministry, Adie Rochmanto was optimistic the utilization of the cement industry will be above 75 percent. This utilization takes into account the growing domestic and export markets.
Former Minister of Industry Airlangga Hartarto also stressed that they would keep increasing domestic cement consumption through the development of infrastructure, property and manufacturing sectors. Another step, the ministry directed the domestic grinding plant using clinker raw materials, which were expected to absorb local production.
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