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Cement industry starts expansion.

Backgrounds

The improvement in the country's economic condition in 2010 has boosted development of the country's cement industry. Work in a number of infrastructure and property projects, shelved earlier, has been resumed. The residential building projects have been the largest consumer of cement in the country. Many people build and renovate houses with the improvement in the people's welfare.

In 2009, cement industry suffered a setback. Demand for cement was weak amid the global slump followed the crisis late 2008. It was shown in the cement production that shrank 3.6% to 36.9 million tons in 2009 from 38.3 million tons in the previous year despite an increase in production capacity. The country's cement production capacity was 47.9 million tons per year in 2009, up 9% from 44 million tons in 2008. The cement industry, therefore, had large idle capacity in 2009.

In 2010, demand for cement grew fast and many factories have operated almost at full capacity. Many producers, therefore, plans expansion. Meanwhile, PT Semen Andalas has resumed operation in Aceh since September 2010, after being out of business when its factory was destroyed by tsunami that devastated Aceh late 2004. The operation of PT Andalas, which is owned by France's cement giant Lafarge brought the country's total production capacity to around 50.8 million tons in 2010..

The capacity expansion by cement industry is planned to keep pace with growing demand that follows the country's economic growth. In addition, replacement of old factories is needed as they are no longer efficient. It would not be easy for small capacity producers to compete in the market especially with the increase in production cost with the higher fuel cost. The prices of coal as the main fuel for cement factories have increased to follow the rise in the oil prices.

Small players like Semen Kupang, Semen Baturaja, and Semen Bosowa could not take full advantage of the rise in cement demand. There are a number of hurdles that keep them out of contention such as locations being tool far from potential markets--Java, Sumatra and Sulawesi and difficulty in transport.

The availability of energy is a vital factor in the development of cement industry. Modernization and modification of factories are made using energy saving machines and to use secondary energy.

The availability and prices of coal are among important factors determining plan for capacity expansion as fuel cost is a major element of production cost. A number of cement producers, planning capacity expansion have to carry out studies to ascertain that coal supply is well secured. The certainty of supply is important as high coal prices in international market may result in more coal exported causing shortage on the domestic market.

Types of cement produced

There are a number of types of cement produced in Indonesia. The main type is OPC (Ordinary Portland cement) or Portland Cement Type I which accounts for 80% of the country's total production. Another main type is composite cement. Other types are produced in small quantity.

Production capacity expands 9%

In the past several years, the country's cement production capacity has remained unchanged. Capacity expansion began only in 2002 for clinker--from 43,780,000 tons to 44,425,000 tons a year or an increase of 1.5% and for cement--to 47,490,000 tons from 47,140,000 or an increase of 0.7%.

However, in 2005 and 2006, the cement production capacity fell as one of the major producers PT. Semen Andalas stopped operation as its factory was destroyed by tsunami late 2004. In addition some old factories were out of function such as those of PT. Semen Padang with capacity of 100,000 tons/year of clinker and 200,000 tons/year of cement; PT. Semen Gresik with a capacity of 800,000 tons/year of clinker; PT. Semen Tonasa with a capacity of 60,000 tons/year of clinker; and PT. Holcim Indonesia with a capacity of 1 million tons/year of clinker and 1 million tons of cement per year.

According to ASI, until 2008, the country's cement production capacity remained unchanged at 44,890,000 tons per year, as there was no producers expanded their capacity or build new factories. In 2009, the country's installed capacity rose 9% to 47.9 million tons per year.

Capacity utilization was 76%. Based on production capacity, private cement companies are larger than state cement companies. Private companies account for 60% of the country's total production capacity with state companies for 40%.

In 2010, the country's production capacity is expected to increase by 2.9 million tons to 50.8 million tons per year. The additional capacity is contributed by five producers, which will invest around US$ 645.6 million for capacity expansion. A new cement mill with a capacity of 1.5 million tons of Indocement is already operational in Cirebon. A new factory with a capacity of 1.6 million tons is being built in Aceh by PT Semen Andalas to replace its old factory destroyed by Tsunami late 2004.

Producers

PT. Semen Gresik, Tbk (PT. SG)

PT. SG has three factories located in Tuban and Gresik, East Java with a total production capacity 8.5 million tons per year. PT. SG has two cement special ports in the two cities, one cement packaging plant in Ciwandan, Banten and 11 units of buffer warehouses in various areas Java and Bali.

On 15 September 1995, PT. SG took over both PT. Semen Padang (SP) and PT. Semen Tonasa (ST) and became its subsidiaries with 99.9% stake.

PT SP in Padang, West Sumatra, is strategically located to supply market in Sumatra. It is the largest supplier of cement for Sumatra. Part of its production is also sent to Java. It also exports part of its production. It has 6 units of packaging plant to support cement distribution in Padang, Medan, Banda Aceh, Batam, Jakarta and Banten. SP also have 14 units of buffer warehouses and cement special port in Teluk Bayur, and Ciwandan of Banten.

The types of cement produced by SP are Ordinary Portland Cement (OPC), Portland Pozzoloan Cement (PPC), Portland Composite Cement (PCC), Oil well Cement (OC) and Super Masonry Cement (SMC).

In 2009, cement production of SP totaled 5.4 million tons down 8.1% from 5.8 million tons in 2008. The decline was a result of major earthquake that rocked Padang in 2009.

PT Semen Tonasa (ST) in Pangkep, South Sulawesi has three factories producing the types of OPC and PPC. ST is the largest supplier of cement for eastern Indonesia including Sulawesi, Kalimantan and Nusa Tenggara. PT ST has 8 units of cement packaging plant in Makassar, Bitung, Samarinda, Palu, Banjarmasin, Ambon and Bali and 5 buffer warehouses. It also has special port to facilitate shipments of its production in Biringkassi.

Currently the SG group has a total production capacity of 19 million tons per year including 9 million tons of PT. Semen Gresik, 5.9 million tons of PT. Semen Padang and 4.1 million tons of PT. Semen Tonasa.

SGG has planned to build 2 new factories each with a capacity 2.5 million tons in Java and Sulawesi. The new factories are expected to come on line in 2012 bringing the production capacity of SGG to 23.9 million tons. Originally SGG planned to build 10 units of coal-fired power plant with a total capacity of 410 megawatts. Construction of the facilities is estimated to cost US$573 million to be operational in 2011. The facilities were to be built to supply power for the

Tuban factories with a capacity of 2 x 65 MW; for the Indarung factories in West Sumatra 3 x 35 MW, for Tonasa factories in Sulawesi 1x35 MW, for new cement factories in Java 2x32MW and for a new cement factory in Sulawesi 2x35 MW).

However, later the company decided to build only two more urgent power plants with a total capacity of only 2x35 MW to cost US$ 114 million in Sulawesi. In 2009, PT. Semen Tonasa secured a loan of Rp 3.5 trillion from syndicate of state banks to build the power plants.

SG also plans to build 4 units of packing plant to cost around Rp600 billion internally financed. The plants will be built in Sorong of Papua, Pontianak of West Kalimantan, East Kalimanatan and Banyuwangi of East Java to facilitate cement distribution.

The company also plans to build a cement plant in Papua if the market expands warrant investment in factory. In 2010, SG sets aside USS 402 million for capital expenditure. Part or US$ 264 million of the fund would be used to finance the construction of new cement factories . The company allocates US$ 1.26 billion for capital spending. For the 2008--2014 period.

The business lines of the SGG quite vary . In addition to cement production by PT. Semen Gresik Tbk, PT. Semen Padang and PT. Semen Tonasa; and cement packaging by PT. Industri Kemasan Semen Gresik, the group has business in industrial estate by PT. Kawasan Industri Gresik; limestone mining by PT. United Tractors Semen Gresik; steel fabrication, civil contracting service by PT. Swadaya Graha; general transport service, general trading, inter-island trade, business agency and good distribution under PT. Varia Usaha; and asbestos and building material production and casting industry by PT. Eternit Gresik.

Cemex sells stake to Blue Valley Pte. Ltd.

Dispute over share ownership in PT SG between the government and CEMEX ended with the Mexican cement giant selling its 24.9% stake to the Rajawali Group through an investment vehicle company Blue Valley Pte. Ltd. at a price of US$ 337 million .

The Rajawali Group, which is controlled by Peter Sondakh, acquired the stake after the government decided not exercises its rights to buy back the stake from Cemex. Under conditional sale and purchase agreement in Sept. 1998, the government was the first party to receive any offer by Cemex to sell its stake. Offer could be made to other buyers if the government decided not to buy the stake. Cemex also agreed to drop its legal suit against the government filed earlier with an international arbitration body.

Cemex acquired the stake from the government in Sept. 1998 at a price of US$ 1.38 per share and sold it to the Rajawali Group with a profit margin of US$ 0.9 per share.

Currently, PT. SG is 51.01% owned by the government 24.9% by Blue Valley Hodings, Pte and 24.09% by investing public.

PT Holcim Indonesia Tbk

PT. Holcim Indonesia Tbk (HI) was formerly known with the name of PT. Semen Cibinong. Holcim Ltd, Swiss-based cement giant, acquired 77.33% of PT. Semen Cibinong in 2001. The name was changed on 1 January 2006. HI has two factories--in Narogong and in Cilacap.

Holcim Ltd, the world largest cement producer, has interests in cement companies in 70 countries in the world.

In 2009, the cement production capacity of PT Holcim was 8.3 million tons. Its production that year was 7.2 million tons, with around 64% disposed of on the domestic market and the rest exported.

In October 2010, HI started construction of a new factory in Tuban, East Java, after being delayed in 2009 as a result of the global financial crisis. The new factory will have a production capacity of 1.7 million tons per year built with a cost of US$ 450 million.

PT. Indocement Tunggal Prakarsa, Tbk (PT. ITP)

PT. ITP was established by the Salim Group in 1985. In 2001, it was acquired by Heidelberg Cement Group, another world's cement giant from Germany.

Heidelberger acquired 65.14% of ITP through subsidiary Kimmeridge Enterprise Pte. Ltd. In 2003, Kimmeridge Enterprise Pte. Ltd transferred the shares of PT. ITP to HC Indocement GmbH. In September 2006, HC Indocement GmbH was merged with Heidelberg Cement South-East Asia GmbH , which became the direct owner of PT. ITP.

ITP operates 9 cement factories in Citeureup, Bogor, the second largest cement factory complex in the world, and two units in Palimanan, Cirebon of West Java and one 1 unit in Tarjun, Kotabaru of South Kalimantan. ITP produces various types of cement including PCC, OPC, OWC and White Cement. ITP is the only producer of white cement in the country.

In 2009, ITP's production capacity for clinker is 15.6 million tons per year and its production capacity for cement is 17.1 million tons per year. Early 2010, a new cement plant of the company came on stream bringing its total production capacity to 18.6 million tons per year, making it the second largest cement maker after Semen Gresik Group in the country.

In 2007, ITP acquired PT. Gunung Tua Mandiri in Bogor, an aggregate producer with a capacity of 1.5 million tons per year and a reserve of 20 million tons. Later in 2009, PT. Mandiri Sejahtera Sentra a subsidiary of ITP, acquired an aggregate miner in Purwakarta, West Java . The aggregate company had a capacity of 0.5 million tons per year with a reserve of 95 million tons.

On 2009, ITP also acquired PT. Bahana Indonor, a shipping company having two vessels--the MV Tiga Roda, a cement carrier with a capacity of 10,000 DWT and the MV Quantum One, floating terminal with a capacity of 8,000 tons for loading cement in packages or in bulk.

Meanwhile, Heidelberg Cement AG transferred its entire shares in ITP to Birchwood Omnia Ltd in 2008. ITP, therefore, is 51% owned by Birchwood Omnia Ltd, 13.03% by PT. Mekar Perkasa and 35.97% by investing public.

PT Semen Andalas Indonesia

The old factory of PT. SA was destroyed by tsunami in 2004. In 2007, the company started to rebuild a new factory which came on line in 2010 with an annual production capacity of 3.1 million tons.

Meanwhile, the company imported cement from Malaysia supplied by a unit of Lafarge, which is the owner of PT. SA to be sold in the country especially in northern part of Sumatra , the market area for cement produced by the defunct factory.

In 2010, PT. SA began the operation of a new factory replacing the old one destroyed by tsunami.

PT Semen Bosowa Maros (PT. SBM)

Construction of the factory began in 1995 and started operation in April 1999. PT. SBM is owned by Aksa Mahmud.

In 2007, PT. SBM finished the construction of a packaging plant in Samarinda, East Kalimantan .

In 2009 , its clinker production capacity rose to 1.8 million tons per year from 1.71 million tons in the previous year. Its cement production capacity rose to 3 million tons per year from 1.8 million tons in the previous year.

The cement production of PT. BSM is distributed mainly for eastern regions of Indonesia.

PT Semen Kupang (PT. SK)

PT. SK is a state company coming on line in 1984 in Kupang, East Nusa Tenggara . In 2009 , its production capacity is 300,000 tons for clinker per year, and 570,000 tons for cement per year. PT. SK is wholly owned by the government.

PT. SK has been outdated in technology, therefore, it is no longer competitive. Its first unit has long been out of function. Its second unit, therefore, was built but later the company was beset by difficulty in securing spare parts for the factory and coal fuel which had to be imported from Vietnam.

The difficulty led to financial problem and stoppage of operation. Late 2007, it managed to resume operation after receiving capital injection of Rp 50 billion from the state budget. The fund was used as a working capital to procure spare parts and coal from Kalimantan.

Cement produced by PT. SK was for distribution in East Nusa Tenggara, which needed around 360,000 tons of cement in 2007.

PT Semen Baturaja (PT. SB)

PT. SB is wholly owned by the government. His factory which is located in Kota Baturaja, South Sumatra has three cement packaging plants in Ogan Komering Ulu (OKU), Tarahan of Lampung, and Kertapati of Palembang.

In 2009, the cement production capacity of PT. SB was 1.2 million tons per year for clinker and 1.2 million tons of cement per year .

PT. SB produces Portland cement of type I using the brand of Semen Tiga Gajah. Its basic material is supplied form its limestone mines in that area. Ots marketing areas cover only southern Sumatra including Lampung, Jambi and Bengkulu and Banten in Java.

In 2013, SB plans to float 30% of its shares in an initial public offering hoping to raise Rp1 trillion in fresh funds. He fund is to be use to build a new factory South Sumatra with a production capacity of 1.5 million tons per year. With the factory, the company hopes to be able to maintain its 29% shares of its traditional markets. The new factory is estimated to need an investment of Rp 2.35 trillion including Rp 2.3 trillion in loan.

The company also plans to build a new cement mill with a capacity of 300,000 tons per year and investment of Rp 325 billion. The factory is to be build near the Baturaja unit to be operational in 2011.

Aspect of energy

Cement industry needs large supply of energy for the process of production. Energy accounts for 40%-50% of production cost. Most cement factories in the country use coal as a source of energy. Therefore, cement industry's coal requirement has increased from year to year. Lately there are cement factories using other fuels like oil palm fruit shell or straw as an alternative to coal.

In 2008, coal requirement of cement industry reached 6 million tons, up to 7 million tons in 2009. A number of cement factories have expanded capacity since 2008. PT Semen Andalas Indonesia with a capacity of 1.8 million tons per year started operation in 2010; The Batam branch of PT Semen Bosowa Maros and PT Indocement Tunggal Prakarsa each expanded their capacity by 1 million tons. The capacity expansion of 3.8 million tons was completed in 2010.

In 2010 , coal supplied to cement industry is estimated to reach 7.6 million tons. The requirement is expected to continue to scale up in the coming years to follow the expansion of production capacity. In 2010, there are five producers PT. Semen Andalas Indonesia, PT Semen Padang, PT Indocement Tunggal Prakarsa Tbk, PT Semen Gresik and PT Semen Tonasa planning capacity expansion and build new factories with a total investment of US$645.6 million all to be completed in 2012.

Most of the new factories to be built for the capacity expansion are outside Java, whereas, the existing power generating plants outside Java are not enough to meet even the present power requirement. Cement producers, therefore, need to build heir own power plants each with a capacity of at least 2x30 MW.

SGG, for example, will need coal for 10 power generating capacity with a total capacity of 410 MW to be operational in 2011. The power plants will be needed to support its capacity expansion program until 2012. In 2012, SGG's production capacity is to be increased to 23.9 million tons.

In 2009, SGG's coal requirement totaled 3.1 million tons, down from 3.2 million tons in 2008 thanks to improvement of efficiency in the process of production.

In long term, the country's cement industry will increase its power generating capacity to 200 MW to support capacity expansion by 14.5 million tons, from 44.89 million tons to 59.39 million tons in 2015.

Indonesia has large coal reserves, therefore, the country's cement industry is not expected to experience shortage in coal supply. In 2009, the country's coal production totaled 226 million tons, and 156 million tons of which were exported with domestic consumption totaling 69 million tons. In 2010, the production is predicted to rise to 250 million tons. High price of coal in international market, however, could result in shortage in supply in the country unless the government regulates exports to guarantee domestic supply.

Cement Production in 2009 totaled 36.9 million tons

The country's cement production has continued to scale from year to year to reach 38.3 million tons in 2008, up from 35 million tons in the previous year. The surge in production was boosted by strong demand from infrastructure and property projects.

However, in 2009, production fell 3.6% to 36.9 million tons as a result of the financial crisis that began late 2008. Many infrastructure and property projects were shelved. Banks thought twice before extending new credits amid the great uncertainty. Without banking support few large projects could be implemented.

Slump hit not only domestic market but also international market even the impact of the global; crisis was worse in international market. Indonesia has exported cement to various countries such as Sri Lanka, Morocco, Madagascar and Middle east countries. In Middle East Indonesia competes sharply against Thailand.

In 2010, the country's cement production is predicted to rise to 38.6 million tons. The increase followed the improvement of the country's economic condition. Many large infrastructure and property projects, shelved earlier, were rescheduled and built.

Production per company

In 2009, most producers slowed down operation on weak demand amid the global financial crisis.

The cement production of ITP totaled 11,531,000 tons or down 5.8% from 12,243,000 tons from the previous year. Its cement exports also fell to 1.6 million tons from 2.3 million tons in 2008 on weak demand in the world market. Its market share also dropped slightly to 30.2% in 2009 from 31.7% in 2008 as the management decided to maintain the price level amid the slump.

Meanwhile, the Semen Gresik Group also was forced to cut production, Semen Gresik to 8,406,000 tons in 2009 from 8,635 ,000 tons in 2008; Semen Padang to 5,365,000 tons from 5,840,000 tons and Semen Tonasa from 3,420,000 tons to 2,951,000 tons.

In 2009, PT SK was forced to suspend operation because of financial problem. The company had no fund for working capital to continue operation. In addition it had no enough power supply from PLN.

In 2010 early August, SK resumed normal operation after reaching cooperation agreement (KSO) with PT Sarana Agra Gemilang. SK restarted operation of its factory with diesel power generating sets and after repairing production equipment and facilities including kiln and clinker machines. With production capacity of 570,000 tons per year, SK needs power supply of 8-10 MW. However, the operation cost was high with the use of diesel fired generating sets. The company, therefore, was not competitive especially after the government stopped subsidy on diesel oil.

Semen Gresik Group grabs largest market share of 45.3%

In 2009, the Semen Gresik Group (GSS) led other producers of cement in the country with a market share of 45.3%. GSS groups Semen Gresik with production of 8,406,000 tons or 22.8% of the country's total production, Semen Padang 5,365,000 tons (14.5%) and Semen Tonasa 2,951,000 tons (8%).

The second largest producer is Indocement with production of 11.5 million tons or 31.2%. The third largest is Holcim Indonesia with production of 6.1 million tons or 16.5% of the country's total production in 2009.

Other producers include Semen Bosowa Maros (4.1%) and Semen Baturaja (2.9%). Semen Andalas and Semen Kupang did not or had not started operation in 2009. Semen began operation only in 2010 after its old factory was destroyed by tsunami late 2004. Meanwhile, Semen Kupang was beset by financial difficulties that it was forced to stop operation.

SGG, ITP and Holcim Indonesia, therefore, dominate the industry.

Exports and Imports

Most of the country's cement production is disposed of on the domestic market . Exports contribute only a little to the total sales. In 2009, exports contributed only 9.8% to the country's total sales of cement.

Cement exports in 2009, totaled 4 million tons, down 18.4% from the previous year's exports of 4.9 million tons.

According to ASI, Indonesian cement products are less competitive in price in international market.

SGG exports cement from PT. Semen Padang, which has a better position in export market than other members of the group. SGG's exports in 2009 totaled 0.6 million tons, down 0.3 million tons from its exports in 2008. .

Semen Gresik has expanded operations to Middle East and South Africa, which constitute potential markets. Around 10% of SGG's exports have been made to the two markets. Semen Padang exports cement mainly to Sri Lanka, Maldives and Bangladesh. Semen Tonasa has so far made exports only to Timor Leste (East Timor).

Asia remains the largest market. In 2008 and 2009, Sri Lanka and Bangladesh were the largest markets for Indonesian cement Exports to Sri Lanka totaled 731,000 tons in 2009, down from 1,020,600 tons in the previous year. Bangladesh has regularly imported cement from Indonesia since 2002. Malaysia imports cement from Indonesia. Exports to that country grew from 491,700 tons in 2008 to 556,000 tons in 2009.

Exports fell to a number of countries Africa in 2009. Exports have been made to a number of countries in Africa including Ghana, Mozambique, and Benin. Exports to Ghana dropped from 756,900 tons in 2008 to 235,000 tons in 2009; to Benin fell from 127,000 tons to 122,000 tons and to Mozambique shrank to 35,000 tons in 2009 from 91,500 tons in 2008.

Cement consumption rising

Indonesia's cement consumption has continued to scale up from year to year. The growth rate, however, fluctuated to follow the trend of macro economic growth.

In 2008, the country's cement consumption grew strongly by 10.8% to 38 million tons. The surge in consumption was thanks mainly to growing demand from the property sector that showed a rapid growth that year. Growing demand was also recorded from infrastructure projects of the government.

In 2009, consumption grew further though slightly by 0.9% to 38.4 million tons. The consumption grew sluggishly in 2009 as a result of the market slump amid the devastating global financial crisis especially in the first half of 2009.

Amid the global financial malaise the country managed to chalk up a positive growth in 2009. The process of recovery already began in the second half of that year. Work in a number of property projects was resumed after being shelved earlier that year. In the first two months of 2010, development was brisker especially in the property sector, but work in infrastructure projects, remained in the doldrums.

It is predicted that cement consumption would grow faster in 2010 boosted mainly by growing demand from the property sector. Cement consumption is forecast to reach 40.7 million tons in 2010 up 5.9% from 2009.

With the growing demand, capacity utilization of cement industry is expected to rise to 85%-90% in 2010 from 80% in 2009.

Cement consumption growth rate higher outside Java

Java has been the main market target for cement producers as the market size has continued to be much larger with high growth in Java. Java still accounts for 55.8% of the country's cement consumption.

However, in 2009 the highest growth in cement demand was recorded in Sulawesi. Cement demand grew 15.7% in 2009, and 19.1% in the first half of 2009. Nusa Tenggara and Kalimantan also recorded a strong growth of 37.2% and 30.6% respectively in the first half of 2009.

The regions outside Java have become more important as cement market as many large infrastructure projects have been and are planned outside Java. The concentration of infrastructure development began to shift from Java to other regions outside Java.

With the growing demand, the prospect of cement industry will remain encouraging in the coming years. ASI predicted that the country's cement consumption in 2010 would grow 5%-6% to around 40 million tons. The growth is boosted mainly by growing demand from the property projects and infrastructure projects planned by the government. In 2011, ASI predicted stronger growth of 6.5% in domestic cement consumption.

Producers begin expansion

A number of cement producers have started capacity expansion to meet growing demand on the domestic market.

PT. Semen Andalas has rebuilt a new factory to replace its old factory destroyed by tsunami late 2004 in North Aceh. The new factory in Lhok Nga started operation in September 2010 with a production capacity of 1.4 million tons a year. The construction of the new factory cost around US$175 million. Semen Andalas started operation at 60%-70% of its capacity in the first year.

In May 2010, ITP commissioned two new factories with a capacity 1.5 million tons per year. The company spent US$ 35 million (US$ 180 million) on the two factories located in Palimanan, Cirebon.

The additional capacity brought ITP's total production capacity to 18.6 million tons per year in 2010, up from 17.1 million tons in 2009.

ITP also plans to build a new plant with a capacity pf 1.5 million tons of cement per year. The factory will be built in Citeureup, West Java with an investment of around US$ 40 million. It is expected to be operational in early 2012. The new factory will increase the capacity of ITP further to 20.1 million tons per year in 2012.

ITP also has planned to build coal-fired power plant with a capacity of 2x50 megawatt to guarantee power supply for its cement production facilities.

PT. Semen Tonasa, a subsidiary of the Semen Gresik Group (SGG) already completed expanding its capacity by 420,000 tons with an investment of US$ 50.4 million in 2010. The capacity expansion increased its capacity to 3.9 million tons/year.

Semen Tonasa also plans to expand its production capacity by 2.5 million tons per year by building a new unit called Tonasa V, located in South Sulawesi. Construction of the new factory is estimated to cost US$ 318 million. Construction of the new unit is already underway late 2010 and it is expected to be operational in 2012. Tonasa V will use equipment and machines form Europe imported at a price of US$ 150 million and from China at a price of US$ 125 million. It also plans to build a power plant with a capacity of 2x35 MW in Tonasa to cost around US$ 114 million.

PT Semen Padang, another subsidiary of SGG has also completed expansion of its production capacity by 860,000 tons for its Indarung VI plant with an investment of US$ 103.2 million in 2010. The capacity expansion increased its capacity to 6.1 million tons in 2010. Semen Padang also plans to build a new factory called Indarung VI with a capacity of 2.3 million tons per year.

PT. Semen Gresik has completed optimization increasing its capacity by 800,000 tons in its unit of Tuban IV, East Java built with an investment of US$ 96 million. The expansion brought its total capacity to 9 million tons per year.

With the capacity expansion or new factories total installed capacity of the SGG in 2010 rose 12.29% from 16.92 million tons to 19 million tons per year.

Semen Gresik also plans to build a packing plant in Banyuwangi, East Java. The packing plant will has silo with an accommodating capacity of 10,000 tons and a capacity to release at least 300 tons per hour, and a packing machine with a releasing capacity of at least 2,200 sacks of cement per hour. The facility is expected to be operational in the end of 2010.

The packing plant will serve customers in eastern Indonesia, including Banyuwangi and nearby areas, Bali, West Nusa Tenggara and East Nusa Tenggara. Banyuwangi is chosen as the location is considered strategic.

SGG also has planned to build cement packing plant and silo in Papua. The plant will have a bagging capacity of 300,000 tons per year built at an estimated cost of Rp110 billion. Construction of the factory is expected to begin in the second half of 2010 and is to be operational in 2011. The packing plant will improve efficiency in transport and distribution of cement from Semen Tonasa. Cement will be shipped in bulk form Tonasa to Papua. Currently the SGG has 15 packing plants in the country.

PT Freeport Indonesia plans to build a cement factory with a capacity of 500 thousand tons per year. The project to be built in Timika, Papua, is estimated to cost US$150 million. The project is expected to be completed in 2012. Half of its production is for use by Freeport itself and the other half will be sent to the market in Papua.

Holcim Ltd from Switzerland, the world's second largest cement producer, through its Indonesian unit, Holcim Indonesia, will build a new cement factory in the country. Holcim Ltd is set to gain from the growing demand in Asia. Currently,

Holcim Ltd relies more on sales in emerging markets mainly Asia and Latin America.

Holcim Indonesia plans to build a factory with a capacity of 1.6 million tons per year. The factory will be built in Tuban, East Java. It is estimated to cost US$ 450 million. The new factory, which is to be operational in 2013, will have loading and unloading facility off shore.

Holcim Indonesia already has cement factories in Narogong, West Java, and in Cilacap, Central Java. Now it has a total production capacity of 8.6 million tons per year. The Tuban factory will supply cement for East Java, Kalimantan, and eastern regions of the country.

Cement industry needs large supply of power. Around 112 kWh (kilowatt per hour) of power will be needed in the production of 1 ton of cement. That means, an addition capacity of 5.38 million tons will need an additional supply of 602.56 megawatt (MW). Cement producers especially outside Java need to build their own power generating plants to guarantee power supply as they could not rely on supply from PLN.

Price

Energy is a big cost component in cement industry. An increase in power price will significantly increase the production cost.

From January to December, 2009, cement price in retail market grew 9% on the average. The plan to raise the electricity tariff will likely lead to increase in cement prices. The price rise will be higher set by producers which entirely depends on PLN for power supply.

ITP's factory in Tarjun, South Kalimantan, uses electricity generated by its own power plant, but its factories in Citeureup and Palimanan, Cirebon still rely on PLN for part of power requirement. Altogether ITP supplies 20% of its power requirement

In April 2009, the anti monopoly agency (KPPU) launched an investigation into allegation of cartel in cement industry. The three largest producers--Semen Gresik Group (PT. Semen Gresik, Semen Tonasa and Semen Padang), Holcim

Indonesia, and Indocement--were suspected of committing cartel . The three control 89% of the country's total production capacity.

Each year, Semen Gresik Group produces around 16.92 million tons including Semen Gresik around 8.2 million tons. Semen Padang 5.24 million tons and Semen Tonasa 3.48 million tons, Holcim Indonesia (8.7 million tons) and Indocement (15.65 million tons). Three other producers Semen Baturaja with production capacity of 1.25 million tons, Semen Andalas (1.4 million tons) and Semen Bosowa Maros (1.8 million tons). Total production of the 8 Indonesian producers was 46.29 million tons.

KPPU said with production capacity making up 89% of the country's total capacity , the three groups operated only at 49% of their installed capacity

In general when the price was good such as the case since October 2008, the producers would raise their production capacity boosted by the prospect of higher profit. However, the industry's capacity utilization remains low, despite the price hike with stable market demand.

Based on data collected by KPPU, the country's production in 2008 grew 3.2% from 35,032 million tons in 2007 to 38,533 million tons. Consumption growth rate, however, was higher at 11.4%. Cement consumption in 2008 rose to 38,072 million tons or 168 kilogram per capita from consumption of 34,172 million tons or 152 kilogram per capita in the previous year. Cement has been a major component determining inflation in the country especially as when infrastructure projects have been implemented with the disbursement of fiscal stimulus by the government.

However, KPPU finally decided that there was no proof supporting the cartel allegation against the 8 producers. The 8 producers, therefore, were cleared of the allegation of monopoly and illicit trade practices. The 8 producers were PT. Indocement, PT Holcim Indonesia (Tbk), PT Semen Baturaja, PT Semen Gresik, PT Semen Andalas, PT Semen Tonasa, PT Semen Padang and PT Semen Bosowa Maros.

Marketing

The market in Indonesia is divided by producers based on their locations . Factory location and production capacity determine their marketing coverage considering transport cost.

The larger production capacity of a factory will need larger coverage . Company groups like SGG have factories in various areas to cover larger market and improve transport efficiency. The system has been used by SGG with factories in Java, Sumatra and Sulawesi. Large capacity makes SGG the main supplier of cement in Java and part of Sumatra such as Riau and Batam .

The market of Batam is supplied from SGS's factories in Tuban as the transport cost is cheaper than when supply is made from Semen Padang .

Semen Tonasa is to strengthen the market foothold of the SGG in Sulawesi and eastern part of the country. Semen Padang also supplies cement for export markets especially in South Asia and Middle East to which it is geographically closer than Semen Gresik or Semen Tonasa.

The SGG is supported by wide distribution network with 30 units of buffer warehouse in strategic locations and 15 packing plants to facilitate distribution all over the country.

Holcim Indonesia (HI) disposes of 95% of its cement production in Java. Java is expected to remain the largest cement market in the future. In 2006, cement sales in Java totaled 21.1 million tons.

PT. HI has two factories in Narogong, Bekasi, West Java and Cilacap, Central Java. It plans to build its third factory in Tuban, East Java, expected to be operation in 2013. The additional capacity is to strengthen its foothold and expand market coverage in West Java, Central Java and East Java. PT. HI focuses more on increasing sales to retail market rather than corporate market. Before being acquired by Holcim, Semen Kujang supplied cement mainly for projects and Semen Nusantara for retail market in Central Java.

Sales of Semen Kujang grew sluggishly as it could not face larger producers in market competition. After its acquisition, Holcim Indonesia changed its market orientation by supplying cement more to retail market although it also had to meet PT. SG and PT. ITP which had succeeded in establishing strong foothold in retail market.

HI also offers franchise partnership in developing retail outlets selling building materials with the brand of Solusi Rumah (Housing solution). Houses built with the Solusi Rumah scheme is 20% cheaper.

Franchisees may buy the franchise at Rp 50 million (for one owning the building material store) to Rp 700 million (for all from consultancy service to house construction). The franchisee will be trained. Until 2009, there were 96 outlets of Solusi Rumah in Java. With the concept, HI hopes to increase the number of the outlets to 480 units by the end of 2010.

Earlier, a HI's subsidiary PT Holcim Betons, offered the franchise system in concrete industry in Indonesia. Investment needed to establish a franchise business in this sector is around Rp 3.5 billion. With that investment, an investor could start production of 24,000 m3 of concrete per year. HI offers technicians to support the franchisee to develop the business. An investor will pay Rp 150 million in joint fee for 5 years and 2% of net sales.

Market Competition

In 2009, the SGG had the largest or a 44.6% share of cement market in the country with ITP having the second largest of 30.2% and HI 13.8%. Other smaller producers split the rest.

In 2009, Semen Tonasa had a market share of 9,4%. Around 48% of its sales were in Sulawesi and 25% in Kalimantan. Semen Tonasa contributes 16% to the total production of the SGG.

Other producers with smaller market share like PT. HI, PT. SB, and PT. BSM could still increase their market share as they have used only less than 80% of their capacity.

Small producers need to expand their production capacity to meet growing market demand otherwise the would face their market share being reduced as large producers also plan capacity expansion. The SGG plans to expand its production capacity to 23.9 million tons in 2012.

Currently , the SGG has a capacity of 19 million tons a year with a market share of 44.6% in 2009. In 2010 , the SGG hopes to increase sales by 6.5% to 18.65 million tons.

The decline in the growth rate of consumption in 2009 has sharpened competition between two of the country's largest producers--PT. SG and PT. ITP. ITP suffered a sluggish growth in sales rising only 2% to 8.5 million tons in 2009 from 8.3 million tons in 2008.

In 2009, ITP's sales totaled 11.5 million tons down from 12 million tons in 2008 . Producers other than the two still recorded an increase in sales in 2009.

Meanwhile, ITP commissioned two new cement mills with a capacity 1.5 million tons per year in September 2010. The operation of the two mills in Cirebon brought the total production capacity of the company to 18.6 million tons. With the additional capacity, ITP would be able to maintain its market share of around 31 % in 2010--up from 30.2% in 2009.

Prospects

Cement requirement is expected to continue to increase as there has been no product as its substitute. Cement consumption will increase with the brisker development of property and infrastructure projects.

The prospects of cement industry, however, will depend much on the economic condition including inflation and bank interest rates.

Cement production is also determined by market demand as cement could not be kept too long.

Fluctuation in cement demand is not very sharp under stable economic condition. Demand grew 6% a year under normal condition.

A number of producers have made plan to expand their capacity until 2013. They plan new factory or optimize their capacity. Among those planning new factories include Semen Tonasa planning to build its fifth unit called Tonasa V with a capacity of 2.5 million tons. The new unit is to be operational in 2011. PT Semen Gresik plans to build one called Tuban V with a capacity of 2.5 million tons to be operational in 2012. Meanwhile, Indocement plans to build a new unit with a capacity of 1.5 million tons in Citeureup also to be operational in 2012.

A cement factory will need a production capacity of at least 2.5 million tons to be efficient, therefore, with an investment of US$ 125 per ton of production, a factory will cost around US$ 312,5 million.

Construction will take 2 to 3 years for completion of a new factory depending on the production capacity. Therefore, construction should start when demand is expected to increase in the next two to three years.

The additional capacity is based on estimate of market demand in five years after the factory comes on stream considering the additional capacity also planned by competitors. If the capacity is too large, there will be excess capacity which would result in opportunity cost and larger maintenance cost.

Assuming that domestic demand for cement will grow 5% per year until 2015, exports average 3.5 million tons per year, and with production capacity of at least 2.5 million tons a year for a factory and capacity utilization of 95%, the country will need capacity expansion every 2 -3 years--2011, 2013, and 2015 by 2 million-5 million tons.
Table--1
Types of cement produced in Indonesia

Types Characteristics Uses

Portland cement -- Used for general buildings
Type I such as houses, multistoried
 buildings, bridges, and road,
 and as material for asbestos
 and ferro cement.

Portland cement Stronger Used for construction of
Type II resistant to waterside projects like
 sulfate ports, quays, dams, etc.

Portland cement Dry quickly and Used for construction of
Type III could immediately buildings that needs high
 sustain high early strength after casting
 pressure. and fast process of work such
 as roads and bridges and
 airports.

Portland cement -- Used for constructions that
Type IV needs low hydration heat such
 as big dams, buildings with
 thick concrete construction
 or buildings in dry areas.

Portland cement Giving better Used to build pools to
Type V protection process chemical industrial
 against corrosion waste, constructions in the
 from water and sea, etc.
 soil containing
 sulfate more than
 0.20%

Oil Well Cement Could harden Used for oil and gas well
 normally in oil construction with certain
 environment which depth
 has high
 temperature.

Portland Composite Easily used, the Construction of concrete in
Cement temperature of general, combination of rocks
 building with and bricks, plastering,
 concrete is gutter, roads, wall fences,
 lower, to reduce production of special
 cracks, the building elements like
 surface of pre-cast concrete, concrete
 concrete which is panels, paving block, etc.
 smooth, water
 resistant,
 sulfate resistant
 and has high
 pressure.

Portland Pozzolan Resistant to Multi-storied buildings
Cement sulfate and (2-3 floors), concrete
 moderate construction in general, mass
 hydration heat. concrete buildings such as
 full plate foundation and
 dams, beach and swamp area
 buildings and building in
 sulfate salt areas and
 buildings that need high
 impermeability such as
 sanitation buildings, water
 area buildings and water
 reservoir.

White Cement Bright color Production of Terrazzo tiles,
 or laying of ceramics and
 other decorative ornaments

Super Masonry House buildings Production of roof tiles,
Cement and irrigation hollow brick, paving block,
 systems with and floor tiles
 concrete
 structure max.
 K 225

Source: Indonesian Cement Association (ASI), Data Consult

Table--2
Production capacity of Indonesia's cement industry, 2000-2009

 Capacity ('000 tons/year)

Year Clinker Cement Growth (%)

2000 43,470 46,970 --
2001 43,780 47,140 0.4
2002 44,425 47,490 0.7
2003 44,425 47,490 0.0
2004 43,340 47,490 0.0
2005 42,690 46,090 -2.9
2006 40,730 44,890 -2.6
2007 40,730 44,890 0.0
2008 39,288 44,009 -1.9
2009 40,899 47,975 9.0
Average 0,3

Source: Indonesian Cement Association (ASI), Data Consult

Table--3
Cement factories of the Semen Gresik Group (SGG), 2009

 Total production
 Number of capacity
Units of Companies factories (unit) (million tons)

PT. Semen Gresik 3 9,0
PT. Semen Padang 4 5,9
PT. Semen Tonasa 3 4,1
Total 10 19,0

Source: PT. Semen Gesik

Table--4
Shareholders of Semen Gresik, 2009

Shareholders %

Government 51.01
Blue Valley Holdings, Pte 24.90
Public 24.09

Source: Semen Gresik, Data Consult

Table--5
Shareholders of PT. HI

Shareholders %

Holcim Ltd 77.33
Public and creditors 22.67

Source: Data Consult

Table--6
Cement factories of ITP, 2009

 Total production
Locations/name Number of capacity
of Factories factories (unit) (million tons)

Citeureup 9 11,9
Palimanan 2 2,6
Tarjun 1 2,6
Total 12 17,1

Source: PT. Indocement Tunggal Prakarsa

Table--7
Shareholders of ITP, 2009

 Number of shares
Shareholders (pieces) %

Birchwood Omnia Ltd 1,877,480,863 51
PT Mekar Perkasa 479,735,234 13.03
Public 1,324,015,602 35.97
Total 3,681,231,699 100

Source: PT. Indocement Tunggal Prakarsa

Table--8
Indonesia's cement producers and capacity, 2009

('000 tons)

Companies Start-up Clinker Semen

PT. Semen Gresik, Tbk 1957 7,161 8,530
PT. Semen Padang 1910 4,952 5,410
PT. Semen Tonasa 1968 3,528 3,900
PT. Holcim Indonesia/formerly 1975 6,358 8,265
PT. Semen Cibinong
PT. Indocement Tunggal 1975 15,600 17,100
 Prakarsa, Tbk
PT. Semen Bosowa Maros 1999 1,800 3,000
PT. Semen Andalas 1982 -- --
PT. Semen Baturaja 1980 1,200 1,200
PT. Semen Kupang 1984 300 570
Total 40,899 47,975

Source: ASI, Data Consult, processed

Table--9
Domestic coal requirement

 Requirement
Year (million tons)

2008 6
2009 7
2010 * 7,6

Source: ASI

Note * estimate

Table--10
Indonesia's cement production, 2000--2009

 Designed capacity
 ('000 tons/y) Production ('000 tons)

 Cap.
 Utilization
Year Clinker Cement Clinker Growth (%) (%)

2000 43,470 46,970 30,119 -- 0.69
2001 43,780 47,140 33,880 12.5 0.77
2002 44,425 47,490 33,248 -1.9 0.75
2003 44,425 47,490 32,629 -1.9 0.73
2004 43,340 47,490 34,886 6.9 0.80
2005 42,690 46,090 34,004 -2.5 0.80
2006 40,730 44,890 34,970 2.8 0.86
2007 40,730 44,890 35,914 2.7 0.88
2008 39,288 44,010 37,680 5.1 0.96
2009 40,899 47,975 35,375 -6.1 0.86

 Production ('000 tons)

 Cap.
 Utilization
Year Cement Growth (%) (%)

2000 27,789 -- 0.59
2001 31,099 11.9 0.66
2002 30,720 -1.2 0.65
2003 30,647 -0.2 0.65
2004 33,230 8.4 0.70
2005 33,917 2.1 0.74
2006 33,032 -2.6 0.74
2007 35,033 6.1 0.78
2008 38,303 9.3 0.87
2009 36,906 -3.6 0.76

Source: ASI, Data Consult, processed

Table--11
Cement production by companies, 2008--2009

(000 tons)

Producers 2008 2009

PT. Semen Andalas 0 0
PT. Semen Padang 5,840 5,365
PT. Semen Baturaja 1,049 1,069
PT. Indocement Tunggal Prakarsa Tbk 12,243 11,531
PT. Holcim Indonesia, Tbk 5,965 6,102
PT. Semen Gresik, Tbk 8,635 8,406
PT. Semen Tonasa 3,420 2,951
PT. Semen Bosowa Maros 1,349 1,482
PT. Semen Kupang 24 0
Total 38,533 36,906

Source: ASI, Data Consult processed

Table--12
Producers and market share, 2009

 Production
Producers (000 tons) Shares (%)

PT. Semen Andalas 0 0
PT. Semen Padang 5,365 14.5
PT. Semen Baturaja 1,069 2.9
PT. Indocement Tunggal Prakarsa Tbk 11,531 31.2
PT. Holcim Indonesia, Tbk 6,102 16.5
PT. Semen Gresik, Tbk 8,406 22.8
PT. Semen Tonasa 2,951 8.0
PT. Semen Bosowa Maros 1,482 4.1
PT. Semen Kupang 0 0
Total 36,906 100.0

Source: ASI/ICN processed

Table--13
Cement domestic sales, exports and imports, 2000--2009

 Sales ('000 tons)

 Export

 Domestic Total Total Imports
Year sales Clinker Cement exports sales (000 tons)

2000 22,307 3,552 4,903 8,455 30,762 24
2001 25,700 3,707 5,750 9,457 35,157 44
2002 27,173 4,184 3,791 7,975 35,148 60
2003 27,528 4,270 3,073 7,343 34,872 11
2004 30,192 4,673 2,946 7,619 37,810 17
2005 30,432 3,407 3,289 6,696 37,128 1,055
2006 30,695 5,023 2,245 7,268 37,964 1,280
2007 32,763 4,873 2,929 7,802 40,565 1,410
2008 36,539 3,301 1,641 4,942 41,481 1,532
2009 37,029 2,797 1,219 4,016 41,045 1,383

Source: ASI, BPS, Data Consult

Table--14
Clinker and cement exports by countries of destination, 2008-2009

(000 tons)

Countries of destination 2008 2009

Sri Lanka 1,020.6 731
Bangladesh 923 632
Malaysia 491.7 556
Mauritius 227.3 284
UEA -- 249
Ghana 756.9 235
Australia 332.1 223
India -- 200
Madagascar 191.4 192
Brunei Darussalam 180.9 169
Tanzania 123.8 166
Benin 127 122
Timor Leste 78.3 69
Mozambique 91.5 35
Singapore 118.6 12
Sub total 4,663.1 3,875
Other countries 279.1 141
Total 4,942.2 4,016

Source: ASI

Table--15
Indonesia's cement consumption, 2000--2009

 Consumption Consumption per
Year ('000 tons) Growth (%) capita (kg)

2000 22,331 -- 110
2001 25,744 15.3 125
2002 27,233 5.8 130
2003 27,539 1.1 130
2004 30,208 9.7 140
2005 31,487 4.2 144
2006 31,975 1.5 145
2007 34,373 7.5 156
2008 38,080 10.8 162
2009 38,420 0.9 166

Source: ASI, ICN

Table--16
Indonesia's cement consumption by provinces, 2007-2009
(000 tons)

(000 tons)

Regions Provinces 2007 2008 2009

Sumatra 8.042 8.921 8.872
 Aceh 1.027 1.044 958
 North Sumatra 1.937 2.182 2.317
 West Sumatra 565 800 705
 Riau 979 894 876
 Riau Island 680 760 701
 Jambi 401 370 383
 South Sumatra 966 1.110 1.159
 Bangka Belitung 222 263 263
 Lampung 896 1.069 1.021
 Bengkulu 371 428 491
Java 19.658 21.245 21.126
 Jakarta 3.393 3.633 3.529
 Banten 1.978 2.040 1.837
 West Java 4.793 5.336 5.479
 Central Java 3.795 4.350 4.486
 Yogyakarta 985 720 601
 East Java 4.715 5.166 5.194
Kalimantan 1.986 2.439 2.436
 West Kalimantan 446 561 554
 South Kalimantan 469 588 631
 Central Kalimantan 263 363 326
 East Kalimantan 807 927 925
Sulawesi 2.073 2.596 3.003
 South east Sulawesi 231 253 297
 South Sulawesi 1.007 1.374 1.669
 Central Sulawesi 334 364 396
 North Sulawesi 402 474 472
 Gorontalo 99 130 131
Nusa Tenggara 1.663 2.023 2.174
 Bali 858 1.082 1.102
 West Nusa Tenggara 494 571 647
 East Nusa Tenggara 311 369 424
Maluku & Papua 750 849 802
 Maluku 346 396 330
 North Maluku -- -- --
 West Papua -- -- --
 Papua 404 453 419
Total Indonesia 34.172 38.071 38.413

 Growth Growth Growth
Regions Provinces (%) 2007 (%) 2008 (%) 2009

Sumatra 14,5 10,9 -0,5
 Aceh 12,0 1,7 -8,2
 North Sumatra 15,4 12,7 6,2
 West Sumatra 12,8 41,7 -12,0
 Riau 18,4 -8,7 -2,1
 Riau Island 7,6 11,8 -7,9
 Jambi 16,0 -7,8 3,6
 South Sumatra 17,6 15,0 4,4
 Bangka Belitung -3,2 18,4 -0,1
 Lampung 21,1 19,3 -4,6
 Bengkulu 10,9 15,4 14,6
Java 2,0 8,1 -0,6
 Jakarta 3,0 7,1 -0,2
 Banten 5,3 3,1 -9,9
 West Java -4,6 11,3 2,7
 Central Java 6,2 14,6 3,1
 Yogyakarta 22,4 -26,9 16,6
 East Java 0,4 9,6 0,5
Kalimantan 20,0 22,8 -0,1
 West Kalimantan 14,4 25,6 -1,3
 South Kalimantan 21,8 25,5 7,3
 Central Kalimantan 45,2 37,8 -10,1
 East Kalimantan 15,6 14,8 -0,2
Sulawesi 7,5 25,2 15,7
 South east Sulawesi 7,6 9,4 17,3
 South Sulawesi 4,5 36,5 21,4
 Central Sulawesi 21,5 9,0 8,9
 North Sulawesi 3,3 18,0 -0,4
 Gorontalo 16,2 31,8 0,2
Nusa Tenggara 10,9 21,6 7,5
 Bali 12,5 26,1 1.9
 West Nusa Tenggara 16,3 15,6 13,4
 East Nusa Tenggara -0,3 18,9 14,7
Maluku & Papua 25,5 13,1 -5,5
 Maluku 11,7 14,3 -16,6
 North Maluku -- 42 --
 West Papua -- 12 --
 Papua 40,3 12,1 -7,6
Total Indonesia 6,9 11,4 0,9

Source: ASI, ICN processed

Table--17
Several expansion planned by cement producer, 2010-2013

 Production
Companies Location capacity (per year)

PT. Semen Andalas Lhok Nga, Nanggroe Semen--1.4 million
 Aceh Darusalam tons per year

PT. Indocement a. Palimanan, West a. Semen--1.5
Tunggal Prakarsa Java million tons
Tbk
 b. Citeureup, b. Cement mill--1.5
 West Java million tons

PT. Semen Tonasa Pangkep, South a. Semen--420,000
 Sulawesi tons

 b. Semen--
 2.5 million tons

PT. Semen Padang Indarung, West Sumatra a. Semen--860,000
 tons

 b. Semen--2,3
 million tons

PT. Semen Gresik a. Tuban, East Java a. Semen--800,000
 tons

 b. Tuban, East Java b. Semen- 2.5
 million tons

 c. Banyuwangi, c. Packing plant--
 East Java 10,000 tons

 d. Papua d. Packing plant
 and Silo--300,000
 tons

PT. Freeport Timika, Papua Semen--500,000
Indonesia tons

PT. Semen Baturaja Baturaja, South Semen--300,000
 Sumatran tons

PT. Holcim Tuban, East Java Semen--
Indonesia Tbk 1.6 million tons

Companies Investment Start up plan

PT. Semen Andalas US$ 175 million 2010

PT. Indocement US$35 million 2010
Tunggal Prakarsa
Tbk
 US$40 million 2012
 (valued at Rp386
 billion)

PT. Semen Tonasa a. US$ 50.4 million 2010

 b. US$ 375 million 2012
 (Rp3.2 trillion)

PT. Semen Padang a. US$ 103.2 2010
 million

 2012

PT. Semen Gresik US$96 million 2010

 Rp3.2 trillion 2010

 2012

 Rp110 billion 2013

PT. Freeport US$150 million 2012
Indonesia

PT. Semen Baturaja 2012

PT. Holcim US$450 million 2013
Indonesia Tbk

Source: Industry ministry

Table--18
Cement prices by brands, October 2010

Producers Brands Price (per sack)

PT. Indocement Tunggal Tiga Roda a. Rp 53,000
Prakarsa Tbk b. Rp70,000 (white cement)

PT. Semen Gresik Tbk Semen Gresik Rp 52,000

PT. Holcim Indonesia Holcim Rp 53,000

PT. Semen Padang a, Rp 49,000 (40 kg)
 b, Rp 50,000 (50 kg)

PT. Semen Andalas a, Rp 43,000 (40 kg)
 b, Rp 50,000 (50 kg)

Source: ICN processed

Table--19
Market shares of cement producers in Indonesia

 Companies Domestic sales

 2008 Share (%)

PT. Indocement Tunggal Prakarsa, Tbk 12,050,892 31.7
PT. Semen Gresik 8,351,054 21.9
PT. Semen Padang 5,124,210 13.5
PT. Semen Tonasa 3,179,986 8.4
PT. Holcim Indonesia 5,375,000 14.1
PT. Semen Andalas 1,551,128 4.1
PT. Semen Baturaja 1,062,524 2.8
PT. Semen Bosowa Maros 1,358,264 3.6
PT. Semen Kupang 20,968 0.1
PT. Semen Kupang 38,069,219 100

 Companies Domestic sales

 Share Growth
 2009 (%) (%)

PT. Indocement Tunggal Prakarsa, Tbk 11,588,484 30.2 -3.8
PT. Semen Gresik 8,517,548 22.2 2.0
PT. Semen Padang 5,007,975 13.0 -2.3
PT. Semen Tonasa 3,617,358 9.4 13.8
PT. Holcim Indonesia 5,342,574 13.8 -1.2
PT. Semen Andalas 1,549,209 4.0 -0.1
PT. Semen Baturaja 1,041,815 2.7 -1.9
PT. Semen Bosowa Maros 1,784,831 4.6 31.4
PT. Semen Kupang -- -- --
PT. Semen Kupang 38,376,083 100 0.9

Source: ASI, ION

Table--20
Estimate of additional production capacity of cement industry in
Indonesia, 2011-2015

(000 tons)

 Existing Additional Domestic
Year Capacity capacity requirement

2011 52,520 200 43,243
2012 57,820 5,300 50,850
2013 64,220 6,400 53,656
2014 66,220 2,000 58,085
2015 70,220 4,000 58,995

 Cap.
 Utilization
Year Exports Production (%)

2011 3,500 46,743 89
2012 3,500 54,350 94
2013 3,500 57,156 89
2014 3,500 61,585 93
2015 3,500 62,495 89

Source: ICN processed
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Title Annotation:INDUSTRY PROFILE
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Sep 1, 2010
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