Semen Cibinong to build cement plant in Myanmar

JAKARTA (JP): Publicly listed cement maker PT Semen Cibinong will have a 70 percent stake in a new US$210 million (Rp 499.8 billion) cement plant in Myanmar.

Semen Cibinong's president, Hashim S. Djojohadikusumo, said yesterday the remaining 30 percent would be owned by state-owned Myanmar firm, Union of Myanmar Economic Holding.

He said the work on the plant would start in the third quarter of this year and be completed by 2000.

The plant will have an annual capacity of one million tons.

"We are lucky as the proposals from China, France and Israel for the project were not approved by the Myanmar government," he said.

He said Myanmar needed about two million tons of cement a year which would rise to three million tons by 2000.

"When our plant comes on line, we will capture one third of the cement market share in Myanmar," he said after Semen Cibinong's extraordinary shareholder meeting yesterday.

But Semen Cibinong will divest gradually between 10 percent and 15 percent of its stake over 30 years, he said.

"The divestment will ultimately decrease our stake to 50 percent," he said.

Hashim said the Indonesian cement market was oversupplied by two million tons a year.

Hashim said other cement makers like PT Semen Gersik and PT Indocement Tunggal Perkasa would continue to increase their production capacity.

The increasing supplies will depress domestic prices, he said.

"I guarantee domestic cement prices will not increase this year or next year," he said.

He said Semen Cibinong's plant in Cilacap, Central Java, would start commercial production next month with an annual capacity of 2.6 million tons.

The Cilacap plant cost about $416 million.

He said the company's cement plant in Narogong, West Java, was scheduled to be operational in November with a production capacity of 2.6 million tons a year.

The Narogong plant cost $402 million.

"These new plants will increase our cement factories to six with a combined capacity of 9.7 million tons a year by the end of 1997," he said.

He said construction would begin early next year on its delayed cement plant in Tuban, East Java.

Hashim refused to disclose the company's financial performance in 1996.

Last year the company bought PT Semen Nusantara in Cilacap for Rp 650 billion.

He said the acquisition improved operational efficiency because "managing two different cement companies is not efficient".

Yesterday's extraordinary meeting approved a stock split halving each share's nominal value from Rp 1,000 to Rp 500. It also approved a five-for-two bonus share issue and to increase the company's paid-up capital from Rp 650 billion to Rp 2.25 trillion in anticipation of a rights issue in November. (09)