Semen Fatoele'oe finally gets license for cement plant

KUPANG, East Nusa Tenggara (JP): PT Semen Fatoele'oe Permai, after waiting eight years, has finally secured a license to exploit a 600-hectare plot here for its planned cement plant which is expected to produce up to one million tons a year.

The company's operation director, Habel Junus Alexander Toepitoe, said here yesterday that his company was now waiting for an operations license from the provincial administration.

"After the (provincial) license is issued, we will immediately start building our cement plant," Habel told The Jakarta Post.

Last year, the company publicized its long wait for a license to develop the cement plant.

Sources said the provincial administration had delayed the license because three cement companies were vying to operate in the same area.

They are Semen Fatoele'oe, PT Semen Osin and state-owned PT Semen Kupang.

Semen Kupang, the only cement producer in the area, can produce up to 120,000 tons here a year. Last year, it upgraded its production plant to raise its production capacity by 150,000 tons a year.

East Nusa Tenggara Governor Herman Musakabe dismissed a suggestion that his administration had delayed issuing licenses for cement plants.

He said his administration had to wait for an approval from the central government before it could award a license.

Habel said his company would work with an Australian investor to exploit the 600-hectare concession, with a supporting area of 10,000 hectares.

The area, rich with raw materials for cement, is projected to be able to support a cement plant producing one million tons yearly for more than 100 years.

Habel said his company would build the cement plant at Fatoele village, some 10 kilometers west of here. The plant would cost Rp 1.7 trillion (US$713 million) to build, mostly financed by local banks.

Habel said that, if the company started building the plant this year, it could start operating next year.

The company wants to export 60 percent of its cement to Australia, and sell the rest domestically.

The company signed a purchase agreement with an Australian importer in Jakarta last month.

If the company goes ahead with its plan and starts commercial production next year, it will significantly raise the country's output of cement, which is projected to oversupply the domestic market this year and next year.

The Indonesian Cement Association has predicted that there would be an oversupply of two million tons this year and 3.5 million tons next year.

This calculation does not include Semen Fatoele'oe's planned output.

If the company can run the new plant at 40 percent capacity, it would add about 160,000 tons of cement a year to the domestic market.

State-owned PT Semen Andalas in Aceh is another company with plans to produce more cement. It will upgrade its plant to raise its output to two million tons next year, up from 1.12 million tons last year.

The company's president, Martin R. Wilkes, said the upgrade would start this year and finish early next year.

Aceh Governor Syamsuddin Mahmud said in Lhoknga, Aceh, on New Year's eve that Semen Andalas should produce more cement to anticipate the development of an industrial estate in Aceh.

"I predict that demand for cement will increase drastically in years to come. Investors have expressed their readiness to build the industrial estate, and President Soeharto has given his approval," the governor said. (yac/rid)