Indonesia - new investment must be outside Java

Estimates released by the Indonesian Ministry of Industry indicate that total national cement capacity in 2017 will reach 102Mta versus a total requirement of 70Mta. In response, the Indonesian government is formulating plans to manage the scale and distribution of future cement capacity investment in the country as it tries to control oversupply, particularly in Java, according to a report in Bisnis Indonesia.

Director General of Chemical, Textile and Miscellaneous Industry Ministry, Harjanto, said that although there will be an excess supply of cement, it would not propose the industry to go onto the ‘negative investment list’, but measures would be taken to control the type of investment.

"We will soon propose the technical requirements to the Investment Coordinating Board [BKPM] specifically geared to the cement industry – one of these being that the cement industry investment must be outside Java ", he said.

In addition, other technical requirements for new plants are that cement production capacity should not be higher than three times the total cement demand in the province where the plant would be located.

Technology employed will also need to meet new guidelines on efficiency and environmental impact, with low energy consumption a key criteria.

Furthermore, he added, integrated capacity will be prioritised over clinker grinding facilities. Therefore, if new clinker plants are constructed, they will be required to source their clinker locally.

In 2017 some of the surplus production is expected to be exported as new capacity comes on-stream. Currently there are five new cement plants that will be in full production in 2017, namely Jui Shin, Anhui Conch, Siam Cement, Cemindo Gemilang and Panasia. These plants will add around 10.7Mta of cement and 9Mta of clinker to the market.