Danish company wins $149m cement projects
JAKARTA (JP): The state-owned cement companies PT Semen Gresik and PT Semen Padang awarded two contracts worth US$149.1 million yesterday to F.L. Smidth-Fuller Engineering of Denmark to build cement plants in East Java and West Sumatra.
Minister of Industry Tunky Ariwibowo witnessed the signing in a ceremony at his office.
The contracts were signed by the president of Semen Gresik, Anang Fuad Rivai, the president of Semen Padang, Abu Bakar, the chairman of the board of F.L. Smidth-Fuller Engineering, Birger Riisager, and the chief executive officer of Fuller, Ib Jacobsen.
The plants will each have a production capacity of 2.3 million tons of cement per annum. The construction of the East Java plant, Tuban III, will cost $80.7 million, while the West Sumatra plant, Indarung V, will cost $68.4 million.
The construction of the two plants will start next January and they are scheduled to start commercial operations in the middle of 1998.
In what was referred to as a "consolidation", Semen Gresik merged with Semen Padang and the South Sulawesi-based PT Semen Tonasa last month, strengthening further its position as Indonesia'S major cement producer, with an expected total annual capacity of 10.9 million tons by the end of the year.
After the completion of the Indarung V and Tuban III plants, the merged companies will have a combined annual production capacity of 18.6 million tons.
Semen Gresik, which currently produces 4.6 million tons per annum, will increase its annual production capacity to 8.7 million tons in 1998, Semen Padang will increase its production capacity from 3.5 million tons at present to 5.8 million tons and Semen Tonasa will lift production capacity from 1.1 million tons to 3.4 million tons.
"Besides increasing production capacity, the company, under its consolidation program, will also intensify its marketing and distribution, as well as improve the corporation's management, investment and human resources," said Rivai.
He said the consolidation will promote efficiency, which will benefit the company's shareholders.
Semen Gresik has floated shares and listed them on the Jakarta Stock Exchange.
The national supply of cement, including that from privately- owned cement firms, is estimated to be 20 million tons this year, while the demand is approximately 25 million tons.
"After the completion of the Tuban III and the Indarung V projects, the country's total production capacity will reach 44.7 million tons in 1998, when the domestic demand is projected at 39.2 million tons," Rivai said.
The domestic demand for cement increased by 20 percent to 21.5 million tons in 1994 and is estimated to rise by 16 percent to 25 million tons this year. (kod)