Cemex declined to comment Wednesday on a senior Indonesian government minister’s assertion that the Mexican cement producer agreed to sell its stake in state-owned Semen Gresik. Cemex’s top executive in Indonesia, Francisco Noriega, declined to confirm or deny the assertion made late Monday by Indonesia’s Coordinating Minister for the Economy, Aburizal Bakrie. "Ask the minister," Noriega told Dow Jones Newswires, without elaborating.
Bakrie told a press briefing Monday that Cemex, which has been embroiled in a long-standing dispute with the government to increase its stake in Semen Gresik, had recently agreed to sell its existing shares instead. Bakrie didn’t elaborate.
The confusion over Cemex’s intentions mark the latest twist in a long-running dispute. Cemex bought a 25.5 per cent stake in Semen Gresik in 1998 and obtained the right to take majority control of the firm by 2001. But Indonesia’s government, which owns 51.1 per cent of Semen Gresik, has stymied Cemex’s efforts to take control due to opposition and threats of social unrest by workers and local politicians.
Indonesia’s parliament in January rejected a compromise plan to split off Semen Gresik’s cement-production facilities at Tuban, East Java, into a new joint venture that would be controlled by Cemex. The reorganization was the centerpiece of a proposal that the government and Cemex had hoped would resolve the matter, but Semen Gresik workers opposed the deal, fearing it would strip the firm of prime assets.
The Indonesian government’s efforts to resolve the dispute have floundered over the past year and Bakrie’s comments on the matter have tended to add to the confusion.
Bakrie assured reporters in December that the government would likely resolve the Cemex conflict by Jan. 28 and had earlier told the Asian Wall Street Journal that the two sides had basically "already agreed" to resolve the dispute and were just working out the details. The Jan. 28 deadline passed without any resolution and in March, Cemex announced that a postponed international arbitration panel hearing to resolve the dispute would convene from July 28 to July 30 in Washington, D.C.
Bakrie’s comments Monday contrasted with those he made at a press briefing last week in which he indicated that government negotiations with Cemex were proceeding satisfactorily, without elaborating. The Cemex case, one of three high-profile contractual disputes facing the government of President Susilo Bambang Yudhoyono, is likely to further reinforce worries about the difficulties foreign investors face in Indonesia.