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NEWS UPDATES 30 July 2009

Indonesia’s Semen Gresik to invest $3.5m in new plant

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Indonesia’s state cement producer PT Semen Gresik is planning to invest 3.5 trillion rupiah ($3.5 million) to build a new cement plant in Indarung, West Sumatra, to boost its production capacity, the Jakarta Post reported.

“Semen Gresik subsidiary PT Semen Padang will manage the new plant,” Semen Gresik president director Dwi Soetjipto said at a memorandum of understanding signing ceremony between state electricity company PT Perusahaan Listrik Negara (PLN) and the Semen Gresik group in Jakarta, on Friday.

Dwi said the new plant’s construction would be financed using internal funds and loans.

“The new plant will be operational by the end of 2011 or at the beginning of 2012,” Dwi said, adding Semen Gresik would start building it in 2010.

According to Dwi, the new plant will be designed to produce 2.5 million metric tons of cement per year and will contribute to 10 percent of Semen Gresik Group’s total production capacity.

Semen Gresik, located in East Java, has two subsidiaries — PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi.

“The new plant’s capacity will almost match the production capacity of our two factories in Gresik and Tuban,” Dwi said.

Dwi acknowledged that Semen Gresik sales fell 3.4 percent to 8 million tons in the first half of this year.

“This drop is not as deep as the fall in national cement consumption. We hope our sales will grow in the second half,” he said.

Although its sales dropped in the first semester, the company saw a 15 percent revenue growth.

“Last year, our revenue grew by 12 percent,” he said, without elaborating on the first semester’s profit. He said price fluctuations in the world market contributed to the company’s revenue.

Semen Gresik posted a net profit of $66.4 billion in the first quarter this year, up by 17 percent from the same period last year. It also posted a revenue of Rp 3.22 trillion in first quarter, up by 20 percent on a year-on-year basis.

The volume of domestic sales in the first quarter reached 3.78 million tons, declining by 23 percent on a year-on-year basis. Semen Gresik is 51 percent owned by the government. Blue Valley Holdings — a subsidiary of business conglomerate Rajawali Group — owns a 24 percent stake and the remaining 25 percent is held by retail investors.

Semen Gresik group is the largest cement producer in Indonesia, with 45 percent market share of Indonesia’s cement industry. It produces 18 million tons per year, 98 percent of its total designed capacity.



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