Indonesia: Semen Gresik starts constructing new factory

Indonesia: Semen Gresik starts constructing new factory
Published: 24 August 2009

State-owned cement producer PT Semen Gresik Tbk officially started building its new factory in Tuban on Thursday, and expects to have it running by the first quarter of 2012.

With an annual production capacity of 2.5Mt of cement, the IDR3.5trn (US$350m) project is aimed at meeting an expected increase in demand once the global economic downturn peters out, said general manager Dwi Soetjipto.

"We’re predicting growth of 6.5 per cent in cement demand by 2011," Dwi said after the opening ceremony for construction of the Tuban IV factory in Sumber Arum subdistrict, Kerek district, Tuban.

State-owned enterprises minister Sofyan Djalil officially launched the project, which is expected to raise the regency’s total cement production to 9Mta, from the current 6.9Mt churned out by three other factories already in operation in the area.

Dwi said Semen Gresik had been trying to raise the total production capacity of all its factories across the country from the current 18.2Mtato 19Mt this year and 20Mt by 2012. "We’re pursuing market share of 45 per cent," he said. "That’s why we need to build more factories."

He added a new factory of the same capacity, the Tonasa V, was currently under construction in South Sulawesi, and was expected to start production in 2011.

Tuban IV, Dwi went on, would employ 900 workers once it was in operation.

He denied claims the factory was merely a relocation of the same project initially planned for Pati regency, Central Java, which was halted due to environmental issues and land acquisition problems.

"This factory is being developed based on a feasibility study on the possible hike in cement demand after the crisis," he said. "We’re also planning to develop a few other factories in West Sumatra and Sulawesi while the land acquisition is being ironed out in Pati."

Semen Gresik recorded a net profit of IDR1.5trn in the first half of this year, a 33 percent increase from the same period last year. During the first six months of 2009, the company sold 8.4mt of cement, both domestically and through export.

Tuban Regent Haeny Relawati said she hoped the bags of cement produced by Semen Gresik in the regency would bear the name of Tuban. Haeny also said the development of the new factory would not just create new jobs, but would also empower the local community.

Minister Sofyan Djalil, for his part, expressed hope the factory would apply environmentally friendly practices in its operation. "If possible, more plants, especially betel palms, should be planted in the factory compound," he said. "Research shows that these trees are capable of stimulating water resources."