Indocement plans big expansion

JAKARTA. Publicly listed cement producer PT Indocement Tunggal Prakarsa will begin a massive expansion in the second half of the year to take the advantage of the country’s growing cement demand.

“We will spend a huge amount of money in the second half of the year to partly finance three new projects,” finance director Tju Lie Sukanto said, declining to give the exact amount.

According to Sukanto, in the first half of the year Indocement spent about 15 percent of its total capital expenditure, which was allocated at between US$200 million to $250 million. Most of Indocement’s capital expenditure in the first half of the year was directed at supporting the development of its grinding mill in Citeureup, Bogor, which will have an output of 1.9 million tons per year. Indocement is expecting the mill to be completed by 2013.

The remaining amount of allocated capital expenditure is expected to be disbursed later this year.

The company will continue to spend large amount of money in the coming years to finance expansion projects.

Indocement plans to begin the construction of a new cement plant that will have an annual production capacity of 4.4 million. The plant, which will be a brownfield project, will be located in Citeureup and is expected to be completed by 2015.

The company also plans to start the construction of two new cement plants with production capacities of 2 million and 2.5 million tons each. Both plants are greenfield projects, one of which will be located in Central Java and the other outside of Java.

Sukanto declined to reveal the total amount of the three projects. However, he said that a brownfield project would need about $130 to $200 per ton while a greenfield project would be in the range of $230 to $350 per ton.

Based on the figures, Indocement will need between $572 million to $880 million for cement plants in Citeureup. It will also need between $460 million to $875 million for each greenfield cement plant in Java and outside Java, which are expected to be completed by 2016.

“We have strong finances to support the expansion,” Indocement corporate secretary Sahat Panggabean said.

The company’s cash and cash equivalent stood at Rp 9.34 trillion ($990.04 million) at the end of June.

Indocement reported a sales volume of 8.69 million tons to the domestic market in the first semester of the year, which was an increase of 21.8 percent when compared to 7.12 million tons in the same period last year. (Raras Cahyafitri/ The Jakarta Post)