Indocement considers builiding new plant

Indocement considers builiding new plant
Published: 05 April 2007

PT Indocement Tunggal Prakarsa, the Indonesian unit of HeidelbergCement may build a new factor after 2010 to meet demand from development in the country. The Jakarta based company plans to increase capacity by 21 per cent to 20Mt by 2009, by expanding existing plants, president director Daniel Lavalle said.

Sales volumes rose 1.5 per cent in Indonesia last year, and the the country’s second largest cement maker expects a four per cent increase this year.

“We are considering to build a brand new line after 2010,” he said in an April 2nd interview in Jakarta. “We have to plan it when the market is going up. We know when we need new capacity.”

Prsident Susilo Bambang Yudhoyono’s government is enacting laws and offering tax breaks to attract US$22bn of investments annually to boost growth in Southeast Asia’s biggest economy, which may spur construcion of roads, ports and houses.

The central bank has also cut borrowing costs 10 times since May and eased lending ruses to increase credit growth.

“About 80 per cent of demand is from housing and with a decline in mortgage rates, demand for housing will increase,” said Ahmad Saoihin, analyst at PT Mandiri Sekuritas in Jakarta who expects cement demand to expand nine per cent this year and 10 per cent each year from 2008 to 2010. Demand will also rise if the government attacts infrastructure investment.

Indocement has been improving efficienty at its plants “but eventually they will have to expand,” he said. The company will study where to build the proposed plant and its cost will depend on the location and the technology used, Lavalle said.