Semen Baturaja raises investment spend

Semen Baturaja is having to increase investment for its new cement plant in South Sumatra to IDR2.9m (US$253m) from the original IDR2.6trn as the weaker rupiah has raised the cost of imported equipment.

“According to our assessments, there will be additional costs of between IDR200bn-300bn due to exchange rate changes, as we have to import machines, Zulfikri Subli, corporate secretary of Semen Baturaja, told the Jakarta Globe. Mr Subli said equipment accounts for between 40-50 per cent of the total planned investment. The additional expenditure will be included in the company’s 2014 budged, he said.

The rupiah has declined by more than 18 percent this year as international investors have withdrawn investment from Indonesia in the past three months amid concerns that the current account deficit will widen further. Semen Baturaja had pegged the rupiah exchange rate at IDR9600 against the US dollar in its original plan, but the currency now trades at more than IDR11,451, according to Bank Indonesia’s median rate, the Jakarta Globe stated.

The company will shortly  be holding a tender for the project which is expected to be completed in November. The new  plant is scheduled to begin operations in the fourth quarter of 2016 and will increase the company’s capacity from 2Mta to 3.85Mta.

Semen Baturaja raised IDR1.3bn from an Initial Public Offering in June and will put all the IPO proceeds towards the plant, with additional funds being sourced from bank loans and internal cash.