State-owned cement maker PT Semen Gresik said it is set to go ahead with its plan to expand its annual capacity by 600,000t this year, despite an increase in fuel prices.
A number of industries have reported postponing expansion plans as there is no guarantee for the supply of coal fuel.
Cement Gresik will increase coal supply under long term contract to support its expansion plan, Rudiantara, vice president of the company said.
Currently SG buys 70 per cent of its coal supply from spot market and 30 per cent under long term contract, Rudyantara said.
Next year long term contracts will account for 70 per cent of supply with spot market purchases accounting for 30 per cent, he said.
He said SG has talked with major coal producers on guaranteeing coal supply for the company.
Last year SG and its subsidiaries PT Semen Padang in West Sumatra and PT Semen Tinasa in South Sulawesi needed 2.4Mt of coal. This year the coal requirement of the country’s largest cement maker is estimated to rise 3 per cent-4 per cent including for the expansion units.
The group had a production capacity of 17.1 million tons in 2007 and the capacity will increase by 600,000t this year and again by 700,000t in 2009, Rudyantara said.
The company also plans to build two new factories with a total capacity of 5Mt to cost around US$670m.
The plan will not be affected by the rise in coal prices at present as they are to start operation only in 2011 or 2012, Rudyantara said.