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

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.