Semen Gresik to invest US$10m in Papua, Indonesia

Semen Gresik to invest US$10m in Papua, Indonesia
Published: 23 December 2009

PT Semen Gresik Group (SGG) is going to invest US$10m next year to develop a cement packaging plant in West Papua.

The measure is taken as part of the state-owned cement company’s efforts to support its expansion plan to develop new cement in Papua with an investment value of US$341.6m.

"The packaging plant is needed to cut the cost of cement distribution. In Papua, one sack of cement can sell for IDR800,000. Packaging plant plays a strategic role in the cement industry," told Minister of Industry M.S. Hidayat to Bisnis recently.

In addition to SGG, a US mining company PT Freeport Indonesia, is also deliberating a plant to develop a cement factory in Timika, Papua, with an installed capacity of 600,000-1Mta.

"Some of Freeport cement production is allocated for internal needs, while the rest is to meet the needs of the surrounding areas. Freeport’s plan to build a cement factory is probably part of their CSR [corporate social responsibility] program. The investment value is estimated at US$150 million," he explained.

To accelerate the factory construction, he added, the Department of Industry had lobbied Papua Governor Barnabas Suebu to make the bureaucratic process easier.

On the other hand, added Hidayat, the Department of Industry would suggest the Department of Finance provide tax incentives for new investments in Papua to stimulate and bolster investments outside Java.

"I suggest infrastructure projects be developed by private parties. As compensation, they will be given a tax incentive for at least ten years."

Based on projection by the Department of Industry, cement consumption in Papua in 2013 will surge 18.1% to 535,000 tons from 453,033 tons in 2008.

Director of Downstream Chemical Industries at the Department of Industry Toni Tanduk disclosed the cement packaging plant would be realized by PT Semen Tonasa (a subsidiary of SGG).

"Based on the initial plan, the cement packaging unit has a capacity of 300,000tpa," he said.

Toni added the new SGG plant was designed to have a production capacity of 600,000tpa and could be optimized to 1.5Mta.