Indocement outlines capex to raise capacity

PT Indocement Tunngal Prakarsa, the second-largest cement producer in Indonesia, plans IDR4-4.5trn (US$349m-393m) in capital expenditure to increase capacity and lift market share.

Updating stakeholders on the company’s 2013 performance at a public presentation earlier this week, Indocement said it sold 18Mt of cement last year, just 0.5 per cent more than 2012. Its market share dipped to 30.4 per cent from 32 per cent in the previous year, a decline the company attributes to a lack of additional output to serve the market.  

Indocement's current production capacity stands at 18.6Mt and volumes are to increase this year as a new 1.9Mta cement mill comes on line at the Citeureup works in the first quarter.

In line with Indocement’s expansion plans, Sukanto said the company would spend most of the IDR4- 4.5trn capex it set aside from its internal reserves on construction of a 4.4Mta brownfield project and two greenfield plants, each with a capacity of 2.5Mta. Following completion of these projects, by 2017-18 the company’s total capacity is expected to reach 30Mta.

During 2013, the company said it was faced with a sharper level of competition, with the entrance  of new players  to the market and expansion programs of existing players. "A number of new competitors have entered the market mostly importing cement from nearby countries. Other companies have declared their intention to enter the Indonesian cement market. This could change the market situation in the coming years," the company said in a statement.

Indocement president director Christian Kartawijaya said his company expected to see its sales volume increase by about six percent this year, in line with the country’s estimated growth in cement demand.