PT Seman Gresik, plans to withdraw its investment from a US$320m plant due to tough land acquisition regulations.
The company’s head of communications, Saifuddin Zuhri, said the plant, located near Kendeng Mountain in Pati regency, Central Java, was expected to produce 2.5Mta.
"There hasn’t been an agreement between the company and residents. If we can’t reach a deal by the end of this month, we will walk away from Pati as there are several other regencies interested in our offer," he said.
He said the company would divert its investment to Rembang regency in Central Java or one of three other regencies in West Java.
The company has received permission from the government for 2,000ha, but the company only needs 1,432ha to build the plant. Most of the land is owned by 1,771 residents in eight villages, Saifuddin said.
"We have made proposals using every pricing standard from this years Taxable Value of Property (NJOP) to the latest real land transaction value in Pati, plus its neighboring region, Tuban regency in East Java," he said.
The taxable value in the district is around Rp 2,000 (about 22 U.S. cents) to Rp 4,000 per square meter, he said.
Semen Gresik offered Rp 10,000/m2 for dried farmland and Rp 15,000 for farmland, Saifuddin said, but the local people asked for Rp 35,000/m2 for dried farmland, and Rp 100,000 to Rp 150,000 for farmland.
Semen Gresik chose Pati as the plant’s location because of its many advantages, including easy entry and distribution access, staff project director Suwandi said.