For Advertorial: Indocement ----- to be published on August 4, 2005

For Advertorial: Indocement ----- to be published on August 4, 2005

Indocement translates vision of sustainable cement initiative into reality -----------------------------------------------------------------------------

Cement is an essential material in today's society. As a major constituent of concrete, cement forms a fundamental element of housing and infrastructure project, including the construction of roads, bridges, airports, seaports, water treatment facilities, schools, hospitals, etc.

The revival of housing and infrastructure development projects in Indonesia over the last several years has led to an increase in demand for this important product and has thus benefited cement producers in the country. Amid the good prospects for the cement industry, however, cement producers are also facing the fact that the rising global population places increasing pressure on essential natural resources, such as land and energy. This means cement producers with long-term visions of sustainable development must find ways to use these resources more efficiently.

Major cement companies have developed a long-term vision of sustainable development and are committed to implementing sustainable development in a proper manner. Among them is PT Indocement Tunggal Prakarsa Tbk, which since 2001 has been controlled by HeidelbergCement of Germany.

Established in 1975, Indocement has been widely recognized as a socially and environmentally responsible cement company in Indonesia thanks to its strong commitment to the idea of sustainable development.

As a member of the World Business Council for Sustainable Development (WBCSD) and one of the signatories of the Cement Sustainability Initiative, HeidelbergCement Group has led Indocement to operate based on three pillars of sustainable development: economic growth, ecological balance and social progress.

Many property projects were halted due to the economic crisis in the mid-1997, painting a bleak picture for cement producers, including Indocement. Many companies had huge debts due to the weakening of the rupiah against the US dollar. However, the bad news for cement producers is a thing of the past, particularly for Indocement. The company has refocused its activities on the core business of producing cement and has taken other efficiency measures, helping the company to regain its financial strength.

"Since 2004, Indocement has been financially sound. Our average sales growth rate is 9 percent per annum and we control about 30 percent of the market," said Indocement president director Daniel Lavalle.

While efforts to boost its business performance continue, Indocement has been engaged in numerous projects related to social and environmental issues under community development (CD) or social corporate responsibility (CSR) programs, part of its commitment to be good corporate citizens.

Currently, Indocement operates 12 plants, nine of which are located in Citereup, Bogor, in West Java; two in Palimanan, Cirebon, also in West Java, and one in Tajun, Kotabaru, in South Kalimantan.

For Indocement, living in harmony with the surrounding community is essential part of assuring the sustainability of its business. Therefore, as part of its efforts to reduce the social impact of the company's operations and improve the welfare of local residents, the company provides job opportunities for local residents. The company employs over 6,000 people, many of them from villages near where the plants are located.

Daniel Lavalle said employee welfare received a great deal of attention from management and was regularly updated and improved from time to time.

"The year 2004, for instance, witnessed the revision of Indocement's Collective Labor Agreement, with a strong focus on ethical issues," he said. "This communication forum, which is held every two years, serves as a means of discussing employee welfare covering benefits and allowances," Daniel Lavalle.

He said Indocement always made safety and health issues key priorities, and did everything it could to provide a safe and healthy working environment. "Indocement has been able to minimize the number of accidents by employing rigorous occupational health and safety standards in line with international best practices," he said.

Besides providing job opportunities, Indocement has also undertaken a wide range of Community Development projects such as building roads, bridges, water distribution systems, schools and mosques. Furthermore, Indocement is providing mobile health services and support education through training courses for local residents in areas, such as farming, duck or sheep breeding, the production of handicrafts, etc.

At Indocement, all Community Development (CD) projects are designed based on the requirements from local communities, said Indocement director Iwa Kartiwa. For example, small and medium enterprises (SMEs) surrounding Indocement's plants in Citereup were in dire need of capital for their ventures and "so we collaborated with bank BRI in launching a loan-lending program. Locals can take advantage of loans with low interest rates", he said.

Indocement also has scholarship programs that help children from low-income families and outstanding students.

In 2004, the company allocated some Rp 12 billion for Community Development programs in several villages.

Meanwhile, as an environmentally responsible company, Indocement finds it essential to take concrete steps to protect the environment as part of its commitment to sustainable development, both locally and globally.

Local environments are sensitive to dust emissions that must be contained using state-of-the-art technology.

With regard to emission reductions, Indocement has decided to change most of the filters on its kilns in order to improve their performance and comply with national and international environmental standards. Furthermore, emission-monitoring equipment is being installed on each individual kiln to continuously monitor emissions, Daniel Lavalle said.

CO2 emissions -- resulting from the combustion of fossil fuels in the cement kilns and the de-carbonization of calcium carbonate inherent in the process -- contribute to global CO2 emissions and have become a global issue due to their likely influence on climate change.

The Kyoto Protocol has introduced new flexible mechanisms to help curb the increase of CO2 emissions.

Indocement has introduced such an initiative -- a Clean Development Mechanism (CDM) project -- and was the first Indonesian company to do so. In this regard, Indocement uses alternative fuels such as rice husks, palm kernels and sawdust to replace fossil fuels, while using various alternative materials in the production process.

The CDM project is now being implemented at all of the company's factories.

To implement the CDM project, Indocement signed an agreement on CO2 emissions reduction with the World Bank in Cologne, Germany on June 9, 2004. Under the agreement, Indocement will collaborate with Prototype Carbon Fund (PCF), one of the World Bank's funding arms. This represents the first undertaking of its kind in Indonesia, and one of the first in the cement industry anywhere in the world.

The use of alternative materials results in reduced requirements of clinker and hence a reduction in the consumption of energy. The reduction of clinkers contributes directly to less decarbonation. But using alternative materials also means that Indocement will be encouraged to use diversified materials taken from natural resources and thus, this will further contribute to sustainable national development. The project uses clean technology that will have an adverse impact on safety and health of the local community. In addition, with the job of collecting, choosing and transporting alternative fuels and materials needed, the project also means new job opportunities.

Indocement's strong commitment to operate the company in a responsible and sustainable manner through Community Development (CD) or Corporate Social Responsibility (CSR) programs has led the company to receive numerous awards. Among the most recent awards that Indocement has received are the OHSAS 18001 Certification for the implementation of Occupational Health & Safety Assessment Series in September 2004, the Superbrands Award 2003-2004 in October 2004 from UK-based Superbrands Organization and the Green Rating for implementing environmental safety measures that exceed the minimum statutory requirements from the Ministry of Environment in October 2004. On July 21, Indocement also achieved the accreditation for laboratory testing (SNI 19- 17025-2000) from National Accreditation Committee of Indonesia.

The numerous awards Indocement has earned are, surely, only part of the evidence of the company's strong commitment to a sustainable cement industry. Thus, Indocement translates long- term vision of sustainable development into reality.