Anhui Conch Cement to invest US$2.35bn in Indonesia and Semen Gresik to raise capacity

Anhui Conch Cement to invest US$2.35bn in Indonesia and Semen Gresik to raise capacity
Published: 01 July 2011

China is planning to construct four cement factories, Indonesia, with a total investment of US2.35bn.

A memorandum of understanding (MoU) on the cement factories development plan was signed by Panggah Susanto, the industry ministry’s Director General for Manufacturing Industry Base and a Chinese consortium on Thursday.

The Chinese consortium consists of Xu Chong Xin, Anhui Province’s State Enterprise Administration and Supervision Commission Director General, Huang Bing Jun, Chairman of Prosperity Group, and Guo Wen San president of Anhui Conch Cement Company Ltd.

The MoU signing was witnessed by among others, Mohamad S.Hidayat, Minister for Industry, Gita Wirjawan, Chairman of the Investment Coordinating Board (BKPM) and Awang Farouk, East Kalimantan Governor.

Guo said that, as a result of the visit, Anhui Conch Cement would establish three cement plans in three provinces in Kalimantan and another one in West Papua province.

The Chinese company intended to build one plant each in Tanjung, South Kalimantan; Tanah Grogot, East Kalimantan; Pontianak, West Kalimantan; and one in West Papua, Guo said.

The Tanah Grogot (Paser) plant, Sepinang, East Kalimantan, will have a total clinker capacity of 10,000tpd. Its investment will reach around US$600m.

“The establishment of plants in Tanjung and Tanah Grogot will be our priority,” Guo Wen Shan  said, 
adding that the abundance of limestone, smooth transportation logistics and stable geological conditions made Kalimantan a suitable place to establish a large-scale cement plant.

Of the US$2.35bn investment, Guo said that around $400 million would be invested in the Tanjung plant, while another US$600m would be for the plant in Tanah Grogot.

Two other cement factories will respectively be built in Pontianak, West Kalimantan Province and Papua Province with investments amounting US$600m and US$750m.

Mr Hidayat welcomed China’s plan to build the four cement factories in Indonesia. "The cement demand in 2010 in Indonesia was 40.7Mt while production totalled 37.8Mt. Demand for cement in the future is expected to increase 7-10 per cent," Mr Hidayat said.

He estimated the cement demand in Indonesia in 2015 will reach 55Mta, while the total productions from the existing nine cement producers currently recorded at 53Mta.

The current cement factories are located at Java, Sumatra, Kalimantan, Sulawesi and Nusa Tenggara islands.

On the news of Anhui Conch Cement Co’s move to build its first overseas production base, it gained 2.5 per cent to CNY28.45 on the Chinese stock market and was set for the highest close since 7 April.

In other news from Indonesia, Semen Gresik, the country’s largest cement maker by output, aims "to raise its capacity to 23Mta next year from 20.5Mta currently," Dwi Sutjipto, CEO of Semen Gresik  said.

The company, which sees production this year at 19.5Mt, plans to build a plant in Kalimantan worth US$350m, in addition to two planned factories in Sumatra and Java islands worth US$350m each.

It also plans to delay issuing US$300m of bonds to 2012 from an earlier plan in the first half this year, said Mr Sutjipto.

Finally, adding further speculation to the future make-up of the country’s cement industry, Indonesia’s industry minister said on Friday that Lafarge may invest €300m (US$425.67m) in a new cement plant in Sumatra.