RI short close to 4m tons of cement by 2010: SG

Zakki P. Hakim, The Jakarta Post, Jakarta

The country's biggest cement producer, PT Semen Gresik, forecasts that Indonesia will experience a cement supply shortage of almost four million tons by 2010 if there is no new investment to expand production capacity.

President director Satrio said on Monday the country needed at least five or six new cement factories to keep up with the national demand, which is rising from between 7 percent and 8 percent a year.

"Ideally, there should be an additional two million tons of cement produced every year," he said at a hearing with the House of Representatives' Commission VI overseeing industry, trade, investment, state-owned firms and small and medium enterprises.

According to Satrio, by 2010 the industry would only produce about 42.51 million tons of cement, or 92 percent of the national capacity of 46.19 million tons, while demand would stand at 46.37 million.

Satrio said each new factory would need investment of up to US$350 million and between three and four years to become established before they could start producing.

However, it would be difficult for the industry to establish new factories, not necessarily because of funding issues but because of the trouble now caused by regional administrations, he said.

"It takes longer now for feasibility studies to build new factories. We have to assess, among other factors, location, environment, the local people's acceptance and local administration issues," he said.

Commission member Zulkieflimansyah of the Prosperous Justice Party (PKS) faction said national cement demand could be higher than estimates presented in the hearing because of the needs of reconstruction projects in tsunami-stricken Aceh and North Sumatra.

"We might have to start considering importing cement," he said.

The estimate was prepared by the Danareksa Research Institute last year before the Dec. 26 disaster and also before the government's plans were announced to boost national infrastructure development during the next five years.

The presentation showed that in 2005, national cement production would reach 32.33 million tons, while demand stood at 32.15 million tons, compared with last year's supply and demand of 30.20 million tons and 29.77 million tons respectively.

There are currently three state cement producers in the country, with PT Semen Gresik's production capacity of up to 15.95 million tons a year making it the largest, followed by PT Semen Baturaja, 1.25 million tons; and PT Semen Kupang (570,000).

PT Semen Gresik has two subsidiaries -- PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi and three factories in Tuban, East Java.

The factories contribute about two-fifths of PT Semen Gresik's overall production and close to 80 percent of the firm's profit.

State cement firms have a total production capacity of 17.77 million tons a year annum while private firms -- such as PT Semen Cibinong, PT Indocement, PT Semen Andalas and PT Semen Bosowa -- total 28.55 million tons.