Cemex eyes int'l court to fix RI row
The Jakarta Post, Jakarta
Mexican cement giant Cemex SA, embroiled in a protracted dispute with the Indonesian government over a stalled acquisition, plans to turn to an international court this week to resolve the issue.
Cemex will file a request on Tuesday or Wednesday with the International Center for the Settlement of Investment Disputes, an affiliate of the World Bank, to act as arbiter, Dow Jones reported from New York on Wednesday.
When contacted by The Jakarta Post on Wednesday for confirmation, Cemex Indonesia's senior advisor Wimar Witoelar declined to comment on the matter.
"According to Cemex policy, we are not allowed to comment on the arbitration case," he said.
The Dow Jones report said the Monterrey-based company had complained that Indonesian authorities hadn't complied with a 1998 agreement that would have allowed it to take a 51 percent stake in state-owned PT Semen Gresik, Indonesia's largest cement maker, by the end of 2001. Cemex paid US$290 million in 1998 for a 25.6 percent stake in Semen Gresik.
Cemex, the world's third largest cement producer, plans to ask the Washington-based arbitration court to rescind the original agreement and order the Indonesian government to pay all related costs and expenses, including compensatory damages, according to the source of the Dow Jones report, who spoke on condition of anonymity.
Cemex would not comment on its plans, and a spokeswoman at the World Bank said no request had been filed with ICSID as of Tuesday afternoon.
The Mexican cement maker, which has been wrangling with Indonesian authorities for two years, has been threatening to turn to international arbitration since November.
Foreign ownership of Semen Gresik is a politically divisive issue in Indonesia.
The Semen Gresik group owns three cement units: Semen Gresik in Central Java, Semen Padang in West Sumatra and Semen Tonasa in South Sulawesi.
Management at Semen Padang barricaded its offices last year and refused to hand over its 2002 financial statement. The unit, based in West Sumatra, has demanded independence from the rest of the company.
The Indonesian government has handled the matter delicately, fearful of fanning separatist sentiments in the province. Many provinces have given rise to demonstrations on autonomy and separatism since the fall of former president Soeharto in 1998.
Semen Gresik had only taken over the Semen Padang management in mid-2003 with the help of the police and the military, which deployed hundreds of officers to accompany the new Semen Gresik- appointed board of management into the compound.
If the World Bank-backed arbitration court listens to the case, a swift final ruling would be unlikely.
"It's a lengthy process and usually takes more than a year," said Ana Luna, World Bank Washington spokeswoman.
In November, Semen Gresik announced that its consolidated net profit plunged 9.2 percent to Rp 266.93 billion (US$29.69 million) during the first nine months of this year, from Rp 294.01 billion in the same period in 2002.
The company's cement sales volume also fell 5.6 percent to 10.401 million metric tons, due to a drop in domestic sales and exports.