SG workers threaten strike if govt hands company to Cemex
SG workers threaten strike if govt hands company to Cemex
Rendi A. Witular, The Jakarta Post, Jakarta
The labor union of state-controlled cement producer PT Semen
Gresik (SG) will launch a massive strike if the government
decides to hand over the company's Tuban, Java plants to Mexican
cement giant Cemex SA.
The decision is one of six options being discussed by the
government to solve the ongoing contract dispute with the Mexican
company over its investment in SG.
The labor union assembly chairman Zubeir Halim said the strike
had already been planned because the workers fear that
"foreigners would dominate the cement market in Java, Bali and
Kalimantan", giving them the power to control the price of the
commodity.
"The Tuban plants supply 80 percent of market demand in Java,
Bali and Kalimantan. We just can't stand to lose them," he told
the House of Representatives' Commission VI for industry and
trade on Thursday.
The hearing was also attended by SG's management team and a
number of noted councillors from Gresik and Tuban, as well as
local clerics and other prominent figures.
Zubeir said future cement price could easily escalate as the
government could no longer use Gresik to balance pressure for
price increases launched by other cement firms already controlled
by foreigners.
Tuban councillor Nur Aziz claimed the residents in his
district would also support and get involved in the protesting,
unless the government dropped the option to sell the Tuban plants
to Cemex.
"Tuban and Gresik councillors will also support the strike. If
the government finally decides to sell the Tuban plants to Cemex,
we will 'disturb' the operation of the company by all means," he
warned.
The Gresik, East Java-based SG has three cement plants in
Tuban, east of Surabaya, with an installed capacity of 7.5
million tons per year. SG plants in Gresik can no longer produce
cement due to raw material shortages.
Sources at the Office of the State Minister of State
Enterprises revealed that the option to buy the Tuban plants
would likely be agreed upon by Cemex to settle its investment
dispute with the government.
Despite possible asset losses, the government will still be
able to retain majority control in SG, with the proceeds from
selling the plants used to establish new cement plants in East
Java.
However, SG marketing director Hasan Baraja reminded the
hearing that setting up and operating a new cement plant would
not be easy as it would take years for completion and eventual
revenues.
"The option to sell the Tuban plants is not strategic and will
cause long-term problems for SG's business," said Hasan.
The Cemex dispute emerged after the management of Gresik's
subsidiary PT Semen Padang and local politicians opposed an
option that allows Cemex to increase its shares in Gresik to a
majority stake as stipulated by a legal investment contract in
1998.
Cemex took the case to the International Center for the
Settlement of Investment Disputes (ICSID), demanding the
Indonesian government to pay damages for not upholding its
contractual obligations.
However, Cemex agreed to postpone the hearing at
ICSID earlier this week, pending the completion of out-of-court
settlement negotiations.
Elsewhere, SG independent commissioner Tjuk Sukiadi, demanded
that SG management and the government be transparent on the
options being offered in the negotiations to prevent any
irregularities in the deal.
"We are suspicious that there is something "fishy" going on in
the negotiations between the government and Cemex due to the lack
of transparency during the process. We must be allowed to monitor
them to prevent state losses," said Tjuk.
SG shares ended lower by Rp 1,500 to Rp 17,750 on the Jakarta
Stock Exchange on Thursday.