Indonesia concerns over cement shortage by 2012

Indonesia concerns over cement shortage by 2012
Published: 24 January 2008

Due to the country’s increasing demand for cement, the Indonesian government predicts the country could suffer a cement shortage of up to 1.8Mt in 2012. 
"The number is derived from the projected demand and supply of cement in the next four years, assuming the country’s average growth and inflation rate are 6.5 and 7 per cent, respectively," deputy minister to the State Minister for State Enterprises, Roes Aryawijaya, said Wednesday. 
He was speaking after a hearing with House of Representatives members and state enterprises operating in mining, strategic industry, energy and telecommunication sectors. 
The country’s cement consumption last year rose 6.6 percent to 34.17Mt from 32.05Mt in 2006, according to the Indonesian Cement Producers Association (ASI).
ASI said the increase was driven by rising demands in almost all regions of the country, with Java consuming the largest portion at 19.65Mt, up from 19.31Mt the previous year. 
However, ASI said the cement industry would experience slower growth in 2008 due to a combination of people’s weakening purchasing power and rising production costs that would lead to price increases. 
Roes said the country’s largest cement maker, PT Semen Gresik, could suffer a supply shortage of 1.2Mt by 2011. 
Last year, the company sold 16.94Mt, a slight increase from 16.75Mt in 2006. 
To prevent a shortage in supply, Roes said the company would build two factories in Java and Sulawesi that could provide an additional 5Mt of cement per year. 
"The company will invest approximately US$670m to build the factories. We expect the construction of the factory in Java will be finished in 2012 and the one in Sulawesi in 2011." 
For 2009, however, the government predicts the country will still have a cement surplus of about 7.3Mt.