Tonasa fire not to affect government production target, Indonesia

Tonasa fire not to affect government production target, Indonesia
Published: 08 June 2011

A recent fire at the PT Semen Tonasa IV plant in Bungoro, Pangkep regency, South Sulawesi, will not affect the government’s production target this year, an industry group said.

Indonesian Cement Association (ASI) chairman Urip Timuryono said in Jakarta on Tuesday that the fire, which halted production at the company’s fourth plant for 10 days, caused a
production loss of about 40,000t.

“But the decline in production during the recovery work could be offset by boosting production levels at other factories,” he told The Jakarta Post.

Urip added that the incident would also not affect cement distribution, as the plant, owned by Indonesia’s largest cement producer, state-owned PT Semen Gresik Group, still had about 
200,000t from last year’s production in stock.

A fire, since been determined to have been caused by electrical short circuits, destroyed two finish mills at the plant on May 30. The firm reportedly stopped operations at the plant to fix
 the machines.

According to Urip, during the first quarter of this year, the country’s total cement production reached 10.4Mt, a 7.21 per cent increase from the 9.7Mt in the same period last year.

“We estimate that the production in the second quarter will be much higher and may slow in the third quarter due to lower market demand,” he said, adding that, following the fasting month of Ramadhan, cement demand would fall.

The association earlier estimated that the 2011 total production would rise by 4.97 per cent to 43Mt from 41Mt last year, in line with surging domestic cement consumption of around 6 percent to 42.4Mt this year from 40Mt last year.

PT Semen Gresik, for example, also expects to produce 20Mt of cement this year, an 8.11 per cent rise from 18.5Mt in 2010, to meet growing domestic demand.

However, cement exports in the first quarter of this year fell by 40 per cent to 300,000t from 500,000t in the same period last year, Urip said.

“Exports have declined due to rising demand from the domestic market, partly due to the higher number of development projects,” he said, citing a survey that private sector development projects contributed 70 per cent of the demand, while government projects accounted for the other 30 per cent.

Java island, with a 65 per cent share of the total demand, still dominated cement consumption.

Urip added that, besides greater domestic demand, producers also prioritized the domestic market because the transportation and distribution costs were lower than with of exports.

Overall, he said, exports also plunged by 48.3 per cent to 1.5Mt this year from 2.9Mt  in 2010.