Cemex seeks local support

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.