Cemex seeks local support

Dadan Wijaksana, The Jakarta Post, Jakarta

In an attempt to establish a better understanding with the West Sumatra and South Sulawesi people, cement producer PT Cemex Indonesia, a local unit of the giant Mexico-based Cemex SA de CV, held a gathering here on Tuesday with local journalists and lawmakers.

Francisco Noriega, president of Cemex Indonesia, said during the meeting that the planned acquisition of the publicly-listed state-owned PT Semen Gresik via a put option mechanism would benefit the government and would not prejudice the interests of local communities.

"I can tell you right now that we don't intend to put the trust of local communities in jeopardy. We never have," Noriega said.

"Fears of losing your jobs and the sustainability of your environment when new owners arrive are understandable.

"That's why we're having this meeting which is intended to explain to you that such fears are baseless," Noriega said.

The West Sumatra and South Sulawesi people have protested plans by Cemex to take control of Semen Gresik as the deal would allow the Mexican company to also gain control of PT Semen Padang and PT Semen Tonasa, subsidiaries of Semen Gresik which are located in West Sumatra and South Sulawesi, respectively.

They have been demanding that the government spin off the two units before proceeding with the plan to divest a 51 percent stake in Semen Gresik to the foreign investor.

The resistance from locals, and sometimes legislators, has left the Cemex-government deal hanging in limbo.

At present, Cemex holds 25.53 percent of Semen Gresik shares, the investing public 23.46 percent, with the remainder in the hands of the government.

Noriega insisted that should the deal proceed, it would be a good for the government because Cemex will be buying the government's shares at a price of US$1.72 per share, or almost three times more than their market price.

Under this assumption, the government will receive some $529 million, a much-needed cash boost to the government's receipts from privatization.

Semen Gresik has an annual output capacity of 19.25 million metric tons. Semen Padang has a capacity of 5.57 million tons while Semen Tonasa has a capacity of 3.48 million tons.

Asked why it took his company so long to stage such a meeting, Noriega replied:"It's not that we didn't try. We did, several times in fact. But we've never been allowed to come to Padang to explain our intentions directly to the local community."

He pointed to Semen Padang's board of directors, and even the local authority, who refused to allow his company to come, citing security reasons.