Cemex ceases legal battle: Minister
Cemex ceases legal battle: Minister
Urip Hudiono, The Jakarta Post/Jakarta
Mexican cement giant Cemex SA has agreed to suspend a law suit it
had filed against the government in a protracted dispute
regarding cement producer PT Semen Gresik, a senior minister
said.
Coordinating Minister for the Economy Aburizal Bakrie said on
Friday the suspension had been agreed upon, so as to pave the way
for further negotiations between the government and Cemex to
amicably settle the case.
"We have reached an agreement on some terms for the
negotiations, which includes not to continue proceedings
scheduled for Jan. 11," Aburizal said.
Aburizal did not mention whether the terms also included a
revision to the deal that the government had signed with Cemex in
1998. That deal would have allowed Cemex to increase its stake in
Gresik by 25 percent to make it a majority shareholder in the
East Java-based cement maker.
The deal broke down when the management of Gresik's West
Sumatra-based subsidiary PT Semen Padang opposed the agreement,
saying it feared that foreign ownership in the company would
threaten the cement supply for the domestic market.
Cemex afterwards filed a lawsuit to the Washington-based
International Center for the Settlement of Investment Disputes
(ICSID), accusing the government of breaching the contract and
demanding compensation.
ICSID then set a hearing for the case on Jan. 11.
Observers said the willingness of Cemex to ask for a temporary
halt in the proceedings indicated the government's ongoing
negotiations appear to have borne some fruit.
However, Aburizal reiterated the government would refuse to
pay any compensation sought by Cemex regarding the case in view
of the government's limited budget.
"I'll repeat once again, the government has no money. We will
find a solution in which we will not have to pay for anything,"
he said, stressing that an out-of-court settlement would be the
best possible solution for the government.
A five-strong legal team is representing the government in the
negotiations, which officially started on Dec. 20. Earlier
reports said that the talks would center on six options proposed
by the government.
Sources said that the options include a buy-back mechanism,
meaning that the government would purchase the 25.5 percent stake
currently owned by Cemex, then sell off Gresik's subsidiaries --
PT Semen Tonasa and PT Semen Padang -- before allowing Cemex to
again take control of Gresik.
State Minister for State Enterprises Sugiharto has also said
Cemex would be allowed to build new cement factories in the
country to help meet the rising demand of cement in accordance
with the government's plans for massive infrastructure projects
starting next year.
The government is under pressure to quickly resolve the years-
long dispute with Cemex, as part of its efforts to help revive
investor confidence in the country.