Cemex eyes int'l court to fix RI row

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.