PT Indocement Tunggal Prakarsa Tbk is going to spend US$608m-US$730m or IDR5.59 trillion- IDR6.71 trillion for the next four years to develop cement plant.
President Director of Indocement Daniel Lavalle said the company would keep boosting production capacity and prioritize the domestic market than the export one. According to him, the increase in production capacity would also increase the company’s margin.
"The surge in domestic cement consumption compels Indocement to improve its plant to boost cement production capacity," he informed after the Extraordinary and Annual Shareholders’ General Meeting yesterday.
After modifying its eighth plant to boost annual production capacity to 600,000 tons of cement last year, Indocement will make investments in the construction of a cement plant in Cirebon with 1.2Mt in production capacity, which will set to operate in the second quarter of 2009.
In addition, Indocement currently is conducting an internal study to construct two to three cement plants and is modifying its seventh and eleventh plants in Citeureup.
Indocement will also continue building its ninth and tenth plants in Cirebon and its twelfth plant in Tarjun.
"All of the plants will boost the company’s production capacity from 21-22Mt in the next three years from 17Mt at the moment. It will take between nine months and 12 months to complete the whole projects."
Lavalle explained it required between US$40-US$50/t to realise each of the investment plant. Therefore, to realise a cement plant with a capacity of 1.2Mt the company would need US$48-US$60m, while to boost production capacity by 5Mt would require an investment of between US$200m-US$250m.
If cement consumption remained high in the future, he said, Indocement plans to develop a new kiln with 3Mt in annual production capacity in Citeureup, Bogor, Tarjun, or other regions in Java. "It requires US$120-US$140 per ton to develop a new kiln and the completion will take between three and four years."
Financial Director of Apexindo Christian Kartawijaya said the financing would be taken from the company’s internal cash. "Indocement’s EBITDA is IDR692.8 billion and we will develop the plants gradually. If necessary, we will seek external funding," he said.