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Indocement translates vision of sustainable cement initiatives into reality Indocement has strong commitment to sustainable development ----------------------------------------------------------------------------------------------------------------

Cement is an essential material in today's society. As a major constituent of concrete, cement forms a fundamental element of any housing and infrastructure projects, such as roads, bridges, airports, seaports, water treatment facilities, schools and hospitals etc.

The revival of housing and infrastructure development projects and property in Indonesia over the last several years has led to the increase in demand for this important product and thus benefited cement producers in the country. Amid the good prospect for cement industry, however, cement producers are also facing the fact that the rising global population places increasing pressure on essential natural resources, such as land and energy. This causes cement producers with long-term vision of sustainable development to have to find ways of using these resources more efficiently.

Major cement companies have developed a long-term vision of sustainable development and are committed to implement sustainable development in a proper manner. Amongst them is PT Indocement Tunggal Prakarsa Tbk., since 2001 controlled by HeidelbergCement of Germany.

Established in 1975, Indocement has been widely recognized as a socially and environmentally responsible cement company in Indonesia thanks to its strong commitment to the idea of sustainable development.

As a member of the World Business Council for Sustainable Development (WBCSD) and one of the signatories of the Cement Sustainability Initiative, HeidelbergCement Group has led Indocement to operate based on three pillars of sustainable development: Economic growth, ecological balance and social progress.

Many property projects were put to a halt due to economic crisis in the mid-1977, painting a bleak picture for cement producers, including Indocement. Many companies were involved in huge debts due to the weakening of the rupiah against US dollar. However, the bad story on cement producer is a thing of the past for Indocement. The company refocused its activities on core business of producing cement and took other efficiency measures, which led the company to regain its financial strength.

"Since 2004, Indocement is financially sound. Our average sales growth rate is nine percent per annum and we control around 30 percent market share," said Indocement's president director Daniel Lavalle.

While efforts to boost its business performance continue, Indocement has been engaged with numerous projects related to social and environmental issues under community development (CD) or social corporate responsibility (CSR) programs to demonstrate its commitment to be a good corporate citizens.

Currently, Indocement operates 12 plants, nine of which are located in Citereup, Bogor in West Java; two in Palimanan, Cirebon, also in West Java, and one in Tajun, Kotabaru in South Kalimantan.

For Indocement, living in harmony with the surrounding community is an essential part to assure the sustainability of its business. Therefore, as part of its efforts to reduce the social impact of the company's operation and improve of the welfare of local residents, the company provides job opportunities for local residents. The company employs over 6,000 people, many of them are from villages where the plants are located.

Daniel Lavalle said that employee welfare receives management attention and is regularly updated and improved from time to time. "The year 2004, for instance, witnessed the revision of Indocement's Collective Labor Agreement, with a strong focus on ethical issues," he said. "This communication e forum, which is held every two years, serves as a means of discussing employee welfare covering benefits and allowances", said Daniel Lavalle.

He said that Indocement tried to always place safety and health issues as key priorities by providing safe and healthy working environment. "Indocement has been able to minimize the number of accidents by employing rigorous occupational health and safety standard in line with international best practice," he said.

Besides providing job opportunities, Indocement has also undertaken a wide range of Community Development projects such as building roads, bridges and water distribution system, school buildings, mosques. Furthermore Indocement is providing mobile health services and support education through training courses for local residents in areas, such as farming, duck or sheep breeding, production of handicrafts etc.

At Indocement, any Community Development projects is designed based on the requirements from the localcommunities, said Indocement's director Iwa Kartiwa. For instance, small-and-medium size enterprises (SMEs) surrounding Indocement's plants in Citereup were in dire need of capital for their venture and "so, we collaborate with BRI in launching the loan-lending program. Locals can take advantage of the loan with low interest rate," he said.

The programs include scholarship programs provided for both poor school children and those that have good achievement.

In 2004, the company allocated some Rp12 billion for the Community Development (CD) programs covering several villages.

Meanwhile, as an environmentally responsible company, Indocement find it essential to take concrete steps to protect the environment as part of its commitment on sustainable development, not only locally but also globally.

Local environment is sensitive to dust emissions that must be contained using state-of-the-art technology.

With regard to emissions reduction, Indocement has decided to change most of the electro filters of the kilns in order to improve the performance and comply with national and international environmental standards. Futhermore continous emission monitoring equipment is being installed in each individual kiln, Daniel Lavalle said.

CO2 emissions - resulting from the combustion of fossil fuels in the cement kilns and the de-carbonization of calcium carbonate inherent to the process - contribute to global CO2 emissions and have become a global issue due to the likely influence on climate change.

The Kyoto Protocol has introduced new flexible mechanisms to help humanity curb the increase of CO2.

Indocement has introduced such an initiative - a Clean Development Mechanism (CDM) project - and was the first Indonesian company to do so. In this regard, Indocement uses alternative fuels such as rice husk, palm kernel and sawdust to replace fossil fuels, while using various alternative materials in the production process.

The CDM projects are now being implemented in all company's factories.

To implement the CDM project, Indocement signed an agreement on CO2 emission reduction with the World Bank in Cologne, Germany on June 9, 2004. Under the agreement, Indocement collaborate with Prototype Carbon Fund (PCF), one of the World Bank's fund institutions. This represents the first undertaking of its kind in Indonesia, and one of the first in the cement industry throughout the world.

The use of alternative materials result in reduced requirements of clinker and hence a reduction in the consumption of energy. The reduction of clinkers contributes directly to less decarbonation. But using alternative materials also means that Indocement will be encouraged to use diversified materials taken from natural resources and thus, this will further contribute to sustainable national development. The project uses clean technology that won't have adverse impact on safety and health of local community. In addition, with job of collecting, choosing and transporting alternative fuels and materials needed, the project also means new job opportunity.

Indocement's strong commitment to operate the company in a responsible and sustainable manner through CD programs has led the company to receive numerous awards. Among the most recent awards that Indocement has receive are the OHSAS 18001 Certification for the implementation of Occupational Health & Safety Assessment Series in September 2004, Superbrands Award 2003-2004 in October 2004 from UK-based Superbrands Organization and Green Rating for implementing environmental safety measures that exceed the minimum statutory requirements from the Ministry of Environment in October 2004. On the 21st of July 2005, Indocement also achieved the accreditation for laboratory testing (SNI 19-17025-2000) from Komite Akreditasi National in Indonesia.

The numerous awards Indocement has earned are, surely, only part of evidences of the company's strong commitment on sustainable cement industry. Thus, Indocement translates long- term vision of sustainable development into reality.