Indocement boosts output by 1.3m tons

Indocement boosts output by 1.3m tons

JAKARTA (JP): PT Indocement Tunggal Prakarsa will expand the
production capacity of its cement plant in Cirebon, West Java, by
1.3 million tons per annum with an investment of US$142 million.

The company's president, Sudwikatmono, told journalists
yesterday that 70 percent of the cost for the expansion will be
financed by loans.

Indocement, the country's largest cement producer, yesterday
signed an agreement with Marubeni Corporation of Japan for the
arrangement of loans worth $100 million with a maturity of 11
years.

Indocement also signed a contract with a consortium of
Kawasaki Heavy Industries, Ltd. of Japan and Marubeni to supply
machinery and equipment for the expansion.

With the expansion to be finished in early 1997, Indocement,
which currently controls almost 50 percent of the country's total
annual cement output of 21 million tons, will increase its total
output capacity to 11.3 million tons.

Indocement, besides acquiring the Cirebon plant from PT
Tridaya Manunggal Perkasa Cement, also holds a 51 percent stake
at Indo Kodeco's cement plant in South Kalimantan, which is
expected to start operation in 1997 to produce 2.3 million tons
of cement annually.

Daddy Hariadi, a director of Indocement, said that although
Indocement has conducted massive expansions in a number of its
plants, it will not able to meet the rapidly growing demand of
the domestic market.

He predicted that the current shortage of cement supplies will
continue until 1997, when the expansion projects of a number of
leading cement factories will be completed and production begins.

Minister of Industry Tunky Ariwibowo said recently Indonesia
would import up to five million tons of cement and clinker -- a
substance used for the production of cement -- this year to cope
with the supply shortage.

Director General of Chemical Industries Sujata said that
Indonesia's cement demand is projected at 26 million tons this
year but production will likely reach only 24.5 million tons.

Reference

To attract more private investments for cement manufacturing,
Sudwikatmono suggested yesterday that the government revise local
price references of cement, which have remained unchanged since
January 1993, or remove them altogether

The government, in this case the Investment Coordinating
Board, has issued licenses for 23 new cement projects. However,
most of them have not been utilized.

"If some of those idle licenses are offered to me, I'll surely
take them and then optimize them," Sudwikatmono challenged.

Minister Tunky has acknowledged that financial constraints and
the government-set local price references are the main barriers
for new investments in the establishment of new cement factories.

The price references have been virtually violated by almost
all cement producers, who sell their products far above the set
levels.

As reported by Antara yesterday, cement prices in Palembang of
South Sumatra dropped to Rp 7,500 ($3.4) per 40-kilogram sack
from Rp 9,000 last week and prices in Semarang of Central Java
dipped to Rp 8,750 from Rp 10,500. Price references for both
cities are Rp 5,930.

Minister of Trade Satrio B. Joedono, who is responsible for
price references, has hinted that domestic prices should be
allowed to move within the international price range, otherwise
investors will not be interested in building new cement plants.
(rid)