Cemex seeks arbitration over Semen Gresik row
Cemex seeks arbitration over Semen Gresik row
The Jakarta Post, Jakarta
After showing great patience for several years, Mexican cement
giant Cemex SA has finally decided to take its case to an
international arbitration panel to resolve a protracted dispute
over its plan to acquire Indonesia's largest cement maker state-
owned Semen Gresik.
Cemex said that its affiliate Cemex Asia filed on Wednesday a
request for arbitration against the government of Indonesia
before the International Centre for Settlement of Investment
Dispute (ICSID), a Washington-based affiliate of the World Bank.
Cemex said in a statement on Thursday that it was compelled to
file the petition with the international court after efforts to
negotiate and reach a solution failed. It did not provide
details.
In an earlier report, Cemex said it would ask ICSID to rescind
the original Semen Gresik purchase agreement and order the
government of Indonesia to pay all related costs and expenses,
including compensatory damages.
Cemex in September 1998 paid US$290 million for a 25.5 percent
stake in state-owned Semen Gresik, with an option to increase its
stake to 51 percent by the end of 2001. But the company has not
been able to implement the second phase of the acquisition plan
amid protests from the management of Semen Gresik's rebellious
West Sumatra unit PT Semen Padang and politicians campaigning
against foreign control of local assets.
The government has not been able to resolve the dispute, and
had asked Cemex to remain patient and continue negotiating.
Many analysts acknowledge that the Cemex case would be viewed
by many as an acid test and a negative result would further harm
the country's already weak investment climate.
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
Jakti as well as State Minister for State Enterprises Laksamana
Sukardi declined to comment on the issue.
A senior government official has earlier said that Cemex had
offered three options to resolve the case: the government quickly
implemented the 1998 agreement; the government buys out the Cemex
25.5 percent stake in Semen Gresik; or Cemex injects fresh
capital into Semen Gresik to dilute the government's ownership in
the publicly listed company.
But Semen Gresik labor union chief A. Zubair Halim urged the
government on Thursday to maintain its 51 percent control over
the company, and not to surrender to pressure from Cemex.
He was quoted by Antara as claiming that Semen Gresik was one
of the country's strategic assets.
Semen Gresik, which is based in East Java, has a combined
production capacity of 17.25 million tons, of which Semen Padang
contributes around 5.5 million tons a year, while its South
Sulawesi unit PT Semen Tonasa contributes some 3.8 million tons.