Semen Gresik to raise cash for new plant

Semen Gresik to raise cash for new plant
Published: 12 August 2005

PT Semen Gresik, Indonesia, said Friday that by the end of this year, it expects to finish a feasibility study to build a new plant capable of producing around 2.5Mta of cement a year, Gresik’s Chief Executive Dwi Sutjipto told reporters.  "The study will reveal where and when the new cement plant would be built," he added.  Dwi said his company is providing IDR1 trillion from its internal cash and is seeking to raise IDR2 trillion through bank loans or an issue of bonds to finance the development of the new plant.  "We haven’t decided which kind of fund raising we are going to do to finance the new plant," he said. 

Gresik’s cement sales in the first six months of this year rose 3.8 per cent from the year-ago period to 7.56Mt, driven by an increase in domestic sales on stronger consumer spending power.  Gresik didn’t make forecast for its 2005 sales growth.  Analysts say Gresik produces around 14Mt of cement each year.  The Indonesian government owns 51 per cent of Semen Gresik. Cemex has a 25.53 per cent stake. 

PT Semen Gresik also predicted total local demand for cement would expand 9-10 per cent this year, despite a hike in domestic fuel prices. However, Gresik’s estimate is at the top end of forecasts by analysts and industry executives of a 5-10 per cent increase in demand in Indonesia, the world’s fourth-most-populous nation.  Some analysts had said faster economic growth in 2005 and a pick up in construction as the government pumped money into infrastructure projects would push cement demand higher.