Cement industry eyes investment in Eastern Indonesia

Cement industry eyes investment in Eastern Indonesia
Published: 17 January 2011

The Industry Ministry is targeting the cement industry to aid development in eastern Indonesia, especially Papua. Limited cement supply in the area means that cement prices are very high. ’We need to prepare the price structure,’ Panggah Susanto, the manufacture-based industry director-general said in Jakarta yesterday.

The demand for cement in Papua is currently met by packing plant facilities such PT Semen Gresik in Java and PT Semen Tonasa in South Sulawesi. When cement reaches the Papua port, the cement is priced at IDR85,000, but the original market price is IDR50,000. The price would be much higher if the cement was sent to areas with limited transportation facilities.

A packing plant is a cement-packing facility, which maintains the quality of the cement marketed in Papua as it is packed near the marketing location. The packing plant construction will be the initial stage before building a bigger industry. However, the plan to develop the cement industry in the eastern area must be supported by the government.

Panggah admitted that it required a significant amount of money to invest in eastern Indonesia and touched on potential plans by Chinese investors.

Cement consumption in Papua should total at least be 600,000tpa to allow for investments to profit. A cement factory also requires electricity, but power in Papua remains unreliable. Local cement producers such as Semen Gresik have plans to invest in Papua, with a proposal to build a packaging plant with a 300,000-ton capacity.