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Clinker expansion by cement companies.


The country's cement industry has expanded from year to year to follow the trend in the development of the property and infrastructure sector. The largest consumers of cement in the country are the housing sector.

In 2011, the country's cement production grew 14.4 percent to 45.2 million tons from 39.5 million tons in 2010. The production capacity was recorded at 56,8 million tons per year in 2011 or an increase of t 7.2% from 53 million tons per year in the previous year.

A number of cement producers are seeking to expand their capacity as some of the have been operating almost at full capacity. In addition, demand for cement is expected to continue to grow in the coming years. PT Indocement Tunggal Prakarsa expanded its production capacity by 2.5 million tons to 21.1 million tons per year in 2011. PT. Semen Gresik increased its production capacity by 600,000 tons to 9.7 million tons per year.

The capacity expansion is to keep pace with growing market demand to follow the economic growth and brisker development. In addition some old and inefficient factories need revitalization by replacing machines. Expansion of capacity would improve operation efficiency and make factories more competitive in the market.

Small producers like Semen Kupang, Semen Baturaja, and Semen Bosowa seek to steal a market share in area not covered by big producers such as in eastern Indonesia. Big producers still concentrate in western part of the country mainly in Java which accounts for 55.2 percent of cement consumption in the country. Sumatra is the second largest market of cement accounting for 23 percent, followed Sulawesi and Kalimantan each accounting for 7% of the total consumption.

A number of factors are also considered by investors in building cement factories like the distance of location from market, transport facility and availability of energy or fuel.

Energy is an important factor as energy makes up a considerable part of the production cost. Currently many investors seek to use cheap secondary energy to fuel cement factories.

Currently a critical factor considered in capacity expansion by cement producers is the availability and the price of coal fuel. Cola has been the main fuel for cement factories. Investors or cement producers have asked the government guarantee in coal supply before building new factories. The country is one of the world's largest coal producers but most of its coal production has been exported as the prices are better in international market. In addition many producers have been bound by long term contracts with coal buyers abroad.


There are several types of cement produced in Indonesia. The main type is OPC (Ordinary Portland Cement) or Portland Cement Type I which accounts for 80 percent of the country's total production. Other types include composite and pozzolan cement.


Based on data at the Indonesian Cement Association (ASI), the country's production capacity increased 10.5% to 53 million tons in 2010 from 47.9 million tons in the previous year. The increase came from five producers expanding their production capacity with an investment of US$ 645.6 million. The new production facilities on line in 2011 included a cement mill of Indocement in Cirebon with a capacity of 1.5 million tons, and reconstruction of the 2004's tsunami destroyed factory of Semen Andalas with a capacity 1.6 million tons in Aceh.

The capacity utilization of the country's cement industry averaged 79.6% in 2011. Privately owned cement factories now are largest in production capacity compared to factories of state companies. They account for 60.5% of the total capacity with state companies having only 39.5% of the total capacity.

In 2011, the country's production capacity rose again to 56.8 million tons or an increase of 7.2%. The additional capacity followed expansion by a number of large producers including France's.Lafarge which built a new factory of PT. Semen Andalas in Lok Nga, Mangrove Aceh Darussalam which came on stream in March 2011 to replace one destroyed by the tsunami in 2004.

Lafarge invested US$300 million to build the new factory with a capacity of 1.6 million tons per year. The factory needs 1.2 million tons of clinker per year.

In 2012, the country's production capacity is expected to rise 6.8 million tons to 63.6 million tons with the construction of new factories by PT Semen Gresik Indonesia, PT Semen Tonsasa, and PT Holcim Indonesia.

The industry ministry has required cement factories to reduce the use of clinker cutting the content from 90% to 80% to be more energy efficient but not reducing the quality to be low SNI.


PT. Semen Gresik, Tbk (PT. SG)

PT. SG has 3 factories located in Tuban and Gresik with a production capacity of 9.7 million tons per year. PT. SG has two ports special for cement in Tuban and in Gresik, 1 unit of cement packing plant in Ciwandan, Banten and 11 units of buffer warehouse Java and Bali. In 2011 cement production PT. SG reached 9.7 million tons.

PT. SG acquired PT. Semen Padang (SP) and PT. Semen Tonsasa (ST) in 1995 to join in the Semen Gresik Group (SGG) with 99.9% owned by SG.

SP is located in Indarung Padang, West Sumatra supplying cement mainly for Sumatra. It also supplies cement for Java and exports part of its production mainly to other Asian countries. SP has six cement packing plants in Padang, Medan, Banda Aceh, Batam, Jakarta and Banten. SP also has 14 buffer warehouses a special cement port in Padang's Teluk Bayur, and in Ciwandan of Banten.

SP produces various types of cement including Ordinary Portland Cement (OPC), Portland Pozzoloan Cement (PPC), Portland Composite Cement (PCC), Oil well Cement (OC) and Super Masonry Cement (SMC).

In 2011, its production totaled 6.2 million tons or an increase of 8.7% from 5.7 million tons in 2010.

ST located in Pangkep of South Sulawesi has three units of factories producing the types of OPC and PPC. ST is the largest supplier of cement in eastern Indonesia including Sulawesi, Kalimantan, Nusa Tenggara and Maluku, Papua. ST has 8 units of packing plant in Makassar, Bitung, Samarinda, Palu, Banjarmasin, Ambon and Bali and 5 units of buffer warehouse. ST also has cement special port in Biringkassi.

Currently the total production capacity of SGG is 20.6 million tons per year including PT. Semen Gresik (9.7 million tons), PT. Semen Padang (6.3 million tons) and PT. Semen Tonsasa (4.6 million tons).

In 2011, PT. SG set aside US$ 533 million for capital expenditure. The fund has been used to build a new factories in Tuban, East Java and other factories as well as a power plant in Tonsasa, South Sulawesi.

In 2012, PT. SG sets aside Rp5 trillion for capital spending. Around 20% of the fund would be used to finance the construction of a new factory in Sumatra to cost Rp7 trillion to be disbursed in three years of construction. The construction of the new factory will 70% financed with a bank loan.

Cemex shares sold to Blue Valley Pte. Ltd.

A conflict between the government and CEMEX as co-shareholders of PT SG ended with Cemex selling its 24.9 percent stake in SG to the Rajawali Group through its investment vehicle company Blue Valley Pte. Ltd. at a price of US$ 337 million.

The Rajawali Group, which is owned by tycoon Peter Sondakh acquired the stake after the government said it would not use its right to acquire the stake under conditional sale and purchase agreement/CSPA) signed on 17 September 1998.

Under the agreement co shareholder was the first to receive the offer to buy shares for sales.

With the deal, Cemex also agreed to drop its lawsuit filed with an international arbitrage court against the government.

Currently PT. SG is 51.01 percent owned by the government, 24.0% by Blue Valley Hodings Pte and 24.09 percent by the public.

PT Holcim Indonesia Tbk

PT. Holcim Indonesia Tbk (HI) was, formerly known with the name of PT. Semen Cibinong. Holcim acquired 77.33 percent of PT. Semen Cibinong in 2001. Its name was changed on 1 January 2006. HI has two factories--one in Narogong and another in Cilacap.

Holcim is the world's largest cement producer based in Switzerland. It has stakes in cement factories in 70 countries in the world.

In 2011, HI operated a new factory in Tuban, East Java with a production capacity of 1.7 million tons per year built with an investment of US$ 450 million

The cement production capacity of HI increased to 8.7 million tons in 2011 from 8.3 million tons in 2010. Its production totaled 7.1 million tons in 2011, and most or 64% of the production is disposed of on the domestic market with 36% for exports.

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

PT. ITP was established in 1985 by the Salim Group. In 2001, Heidelberg Cement Group from Germany acquired the majority 65.14 percent stake through its 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 into Heidelberg Cement South-East Asia GmbH which became the owner of PT. ITP.

ITP operates 9 factories in Citeureup, Bogor, the second largest unit of factories in the world, 2 factories in Palimanan, Cirebon, West Java and 1 factory in Tarjun, Kotabaru, 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.

By the end of 2010, the clinker production capacity of the company was 15.6 million tons per year and its cement production capacity was 18.6 million tons per year. The operation of new units of cement mill in Palimanan and Citeureup in 2011, brought the total production capacity of the company to 21.1 million tons per year.

In 2008, Heidelberg Cement AG handed over its entire stake in ITP to Birchwood Omnia Ltd. Therefore, shareholders of IPT now include Birchwood Omnia Ltd (51%), PT. Mekar Perkasa (13.03%) investing public (35.97%).

PT. Lafarge Cement Indonesia

It was formerly named PT. Semen Andalas Indonesia, before it was destroyed by tsunami late 2004. In 2007, a replacement was built for its factory. During the time that it could not produce cement it imported cement from Lafarge unit in Malaysia to supply cement in Aceh and North Sumatra, to maintain its market foothold in northern Sumatra.

In 2010, PT SA resumed operation and its name was changed with PT Lafarge Cement Indonesia.

In 2011 the clinker production capacity of the company was 1.2 million tons/year and cement production capacity was 1.6 million tons/year.

PT Semen Bosowa Maros (PT. SBM)

The factory of the company was built in 1995 and c came on stream in April 1999. PT. SBM is owned by local tycoon Aksa Mahmud.

In 2007, PT. SBM completed the construction of a packing plant in Samarinda, East Kalimantan.

By 2011, the clinker production capacity of the company rose to 1.8 million tons per year from 1.71 million tons per year in the previous year. Its cement production capacity also rose from 1.8 million tons to 3 million tons per year. The production capacity includes those of Semen Bosowa Maros 1.8 million tons and Semen Bosowa Batam 1.2 million tons.

In 2011, the cement production of PT SBM totaled 1.9 million tons. The main market of cement production of PT. BSM is eastern Indonesia.

PT Semen Kupang (PT. SK)

PT. SK is a state company coming on line in 1984 in Kupang, East Nusa Tenggara. In 2011, its clinker production capacity was 300,000 tons per year, and cement production capacity was 570,000 tons per year. PT. SK is wholly owned by the government.

PT. SK has been outdated in technology that it is no longer competitive and efficient. The company then built a new second factory, but it still could not operate efficiently. The company, therefore, was facing financial problem and was forced to stop operation. By the end of 2007, PT. SK resumed operation with financial injection from the state budget of Rp 50 billion. The fund was used as working capital and to buy new spare part for the new factory Semen Kupang II and to pay for coal fuel from Kalimantan. The main market of PT. SK is East Nusa Tenggara.

PT Semen Baturaja (PT. SB)

PT. SB is wholly owned by the government. PT SB is located in Kota Baturaja, South Sumatra having three packing plants in Ogan Komering Ulu (OKU), Tarahan (Lampung), and Kertapati, Palembang.

In 2011, the production capacity of PT. SB was 1.250 million tons of clinker per year and 1.2 million tons of cement per year.

PT. SB produces Portland I with the brand of Semen Tiga Gajah. The basic material is abundantly available in Baturaja. Its main markets are southern Sumatra including South Sumatra, Lampung, Jambi and Bengkulu and Banten in Java.

SB plans to sell 30% of its share through initial public offering (IPO). It hopes to raise Rp1 trillion from the share sales planned in 2013. The fund will be used to build a new factory South Sumatra with a production capacity of 1.5 million tons per year. The new factory is to maintain its market foothold. It hopes to maintain its market share of 29% in the region in 2013. The new factory will need an investment of Rp 2.35 trillion which will include Rp1.3 trillion in loan.

The company also built a new cement mill with a capacity of 300,000 tons per year to cost around Rp 325 billion. The new mill built in its complex in Baturaja came on line in 2011.


Cement factories need large supply of energy in the process of production. Energy makes up 40%-50% of its production cost including for heating and power plant. Currently most cement plants use coal for fuel. Coal consumption in the country, therefore, has increased rapidly. Lately some cement factories begin to use charcoal or husk for fuel.

Coal consumption by cement industry in the country 2011 totaled 7.6 million tons. The consumption is forecast to rise again in the coming years with more cement producers planning expansion of production capacity. In 2010, there were five cement producers coming in line or expanding capacity including PT. Semen Andalas Indonesia, PT Semen Padang, PT Indocement Tunggal Prakarsa Tbk, PT Semen Gresik and PT Semen Tonsasa, which is expanding capacity and building new factory with an investment of US$ 645.6 million to be operational in 2012.

Most of the new factories will be built outside Java. The problem outside Java is shortage in power supply forcing cement factories to build their own power plants to guarantee power supply.

SG for example needed coal for 10 coal-fired power plants with a total capacity of 410 Megawatts (MW) operational in 2011. The power plants are needed to support its plan to expand capacity until 2012. In 2012 the production capacity of SGG will be increased to 23.9 million tons.

SG has established a subsidiary PT SGG Energi Prima to be in charge of coal procurement for its cement factories.

The entire factories of Semen Gresik Group needed 4.2 million tons of coal in 2011. This year the requirement is predicted to rise with the growing number of its factories including new ones in Tuban and Tonasa, Pangkep, South Sulawesi.

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

Indonesia has one of the largest coal reserves in the world that cement producers should not worry about coal supply in the future, but most of the country's coal production have been exported resulti8ng in constraint in coal supply in the country. In 2010, the country's coal production totaled 275.2 million tons, and 188 million tons of which were exported. In 2011 the coal production rose to 290 million tons, but supply on the domestic market was still short of requirement.


The country's cement production has continued to increase--reaching 45.2 million tons in 2011, up from 39.5 million tons in the previous year or an increase of 14.4%.

The global crisis since late 2008, resulted in weak demand for cement in export market. Indonesia has exported cement to Srilanka, Bangladesh, Maroco, Madagascar and Middle East. Indonesian producers compete sharply in international market such as with Thai producers.

In 2012, the country's cement production is forecast to reach 60 million tons with additional production from a number of new factories.


In 2011 all producers increased production to meet growing demand.

Production of ITP was recorded at 18.6 million tons in 2011 or an increase of 23.2% from 15.1 million tons in the previous year. However, exports by ITP declined to 25,300 tons from 28,300 tons because of high demand on the domestic market. ITP's market share also rose to 33.4 percent in 2011 from 31.8 percent in 2010 as a result of an increase in production from its new factories.

Semen Gresik Group recorded an increase in production,--Semen Gresik to 9.8 million tons in 2011 from 8.9 million tons in 2010, Semen Padang surging to 6.2 million tons from 5.7 million tons and Semen Tonsasa from 3.7 million tons to 3.9 million tons.

PT. Holcim Indonesia (PT. HI) recorded a sharp increase in production from 5.6 million tons in 2010 to 7.2 million tons in 2011.

PT. Semen Kupang and PT. Lafarge Cement Indonesia (formerly PT. Semen Andalas) suspended operation in 2010 and 2011 on financial problem and process of rebuilding factory.


In 2009 the Semen Gresik Group (GSG) had the largest market share of 44% in the country. GSG groups Semen Gresik with production of 9.8 million tons (with a market share of 21.7%), Semen Padang with production of 6.2 million tons (13.7%) and Semen Tonsasa 3.9 million tons (8.4%).

The second largest in market share was Indocement with production of 15.1 million tons or a market share of 33.4%, followed by Holcim Indonesia with a market share of 15.7% or a production of 7.1 million tons.

Other smaller producers included Semen Bosowa Maros producing 1.9 million tons (4.2%) and Semen Baturaja 1.2 million tons (2.7%). Semen Andalas and Semen Kupang had no record of production in 2011. Semen Andalas was still in the process of acquisition by Lafarge, and Semen Kupang was beset by financial problem.

SGG, ITP and Holcim have continued to dominate the market.


Most of Indonesia's cement production is disposed of on the domestic market. A small part is exported. In 2011, exports made up 2.5 percent of the total sales.

Exports in 2011 totaled 1.187 million tons down 59.1 percent from 2.904 million tons in 2010.

ASI said producers are not interested in exporting their production as the prices are not good on tight competition in international market.

In 2011, Holcim Indonesia exported 78,300 tons of cement, the largest compared to exports by other producers.

Exports by the SGG have been made mainly by PT. Semen Padang as it has better export price. PT. Semen Tonsasa, another subsidiary of SGG, exported 76,800 tons in 2011. Total exports by the SGG reached 96,000 tons or down 65.3 percent from 276,800 tons in 2010.

Semen Gresik has exported cement to South Africa and Middle East. Around 10% of SGG's exports are made to the two regions, where SGG has established good market foothold. Semen Padang exports cement to Sri Lanka, the Maldives and Bangladesh. Semen Tonsasa has exported only to Timor Leste.

The largest countries of destination are in Asia. In 2010 and 2011, the largest countries of destination were Bangladesh. Exports to Bangladesh totaled 520,600 tons in 2011, up from 451,100 tons in 2010. Bangladesh has imported cement from Indonesia since 2002.

Exports to Australia totaled 218,300 tons in 2011.


Cement consumption in the country has continued to increase though the growth rate tended to fluctuate to follow the economic trend.

In 2011, a high growth of 17.7 percent to 47.9 million tons was recorded in the domestic consumption of cement, up from 40.8 million tons in 2010. The surge in consumption followed brisk property development. Demand also increased from infrastructure projects of the government. The relatively favorable economic condition in 2011 contributed to expansion of cement industry. Big property and infrastructure mainly toll road projects were built in 2011. The government has number of big infrastructure projects under the program of Master Plan of Acceleration and Expansion of Indonesian Economic Development (MP3EI). The condition necessitated an increase in supply of cement in the country.

It is predicted that in 2012 cement consumption would grow by a higher rate than in 2011 with the property and infrastructure sectors remain the largest consumers. This year cement consumption is forecast to reach 54 million tons, or an increase of 12.7 percent.

Capacity utilization of cement industry is also expected to rise to 85%-90% from 80% in 2011.


Java has become the largest market for cement in the country. Java accounts for around 55.2% of the country's cement consumption.

The highest growth of consumption, however, was recorded in Sulawesi in 2011--up 15.8%. In 2011 other regions outside Java such as Nusa Tenggara and Kalimantan also recorded a high growth in cement consumption up 19% and 17% respectively .

The shift in growth from Java to other islands followed the brisker development of infrastructure projects needing cement in the outer regions. Meanwhile, the growth of infrastructure projects needing cement in Java has slowed down.

With the growing cement consumption in the country, the prospects of business in cement industry are expected to remain good. In 2012, ASI predicted cement consumption in the country would grow 10% - 12% to 54 million tons. The growth is attributable to property projects mainly housing projects and infrastructure projects financed by the government. In 2013, ASI predicted cement consumption would grow 10%.


The growing consumption has encouraged producers to expand their capacity by building new factories or expanding production capacity through optimization. Some producers build new factories outside Java such as Sulawesi in Tonsasa, Maros, etc.

A number of new factories are expected to come on stream in 2013 and 2014.

PT Semen Gresik has built new factory with a production capacity of 2.5 million tons per year. The new factory in Tuban, East Java, was built with an investment of Rp3.5 trillion starting production earlier this year.

PT Semen Gresik Tbk is also building a cement factory in Manokwari, Papua, with a capacity of 600,000 tons to cost around Rp1.2 trillion. It also plans to build a packing plant and a 150-meter quay in that area that could be used by ships of 10,000 dead weight tons (DWT).

PT Semen Gresik Tbk has also built new factories, SGG-III, in Sumatra and SGG-IV in Java each with a production capacity of 3 million tons per year, to cost Rp3.25 trillion (US$352.09 million) and Rp3.717 trillion (US$402.59 million) respectively.

PT Indocement Tunggal Prakarsa Tbk is building a new cement mill with a capacity 2 million tons per year in Citeureup, Bogor, West Java to come on stream in 2013. In 2014, Indocement hopes to start operation of a new factory in Bau-bau, Southeast Sulawesi with a capacity of 1.9 million tons per year.

The entire factories of Indocement have a total production capacity of 21.1 million tons per year. The factories are located Citeureup, Palimanan, and Tarjun Kotabaru. It also has 17 factories producing ready for use concrete in Jakarta, Bogor, Depok, Tangerang, Bekasi, and a number of cities in Central Java with a total capacity of 1.3 million cubic meters per year.

Holcim Indonesia, a local unit of Holcim Ltd from Switzerland, the world largest cement producer, also plans to increase production. Currently Holcim Ltd relies expansion on its units in emerging markets in Asia and Latin America.

Holcim Indonesia plans to build a new factory with a capacity of 1.7 million tons per year. The new factory to be built in Tuban, East Java, will cost around US$ 450 million. It will have a loading and unloading port to be operational in the first half of 2013. The factory will support market expansion by Holcim in East Java, Bali, Kalimantan, and Eastern Indonesia.

The new factory in Tuban will add to the production facilities and distribution systems Holcim already in the country. Holcim already has two cement factories one in Narogong of West Java, and another in Cilacap of Central Java. It also has a cement mill center.

Currently Holcim Indonesia has a production capacity of 8.3 million tons per year from its two factories. The new factory will increase the production capacity to 10 million tons per year.

PT Semen Baturaja plans to build a cement mill with a capacity of 300,000 tons per year to cost Rp 350 billion. The factory to be built in Baturaja, South Sumatra, will come on stream by the end of 2012.

Semen Baturaja cooperates with Loesche GmbH of Germany to provide the machines of the cement mill at a price of 7.9 million euro. The machine could process ordinary Portland cement up to 125 tons per hour and Portland composite as much as 130 tons per hour.

PT Semen Baturaja also plans to build a new cement factory with a production capacity of 1 million tons per year in the first phase to come on line by the end of 2012. The factory will be built in Muaradua, Ogan Komering Ulu, South Sumatra over an area of 3,000 hectares with a limestone hill that could supply it with the basic material over a period of up to 150 years.

Currently Semen Baturaja has three factories with a total production capacity of 1.250 million tons per year, respectively located in Baturaja and Palembang, South Sumatra, and in Panjang, Lampung.

In 2011, the Lafarge Cement from France acquired the entire shares of PT. Semen Padang, which was then renamed PT. Lafarge Cement Indonesia (PT.LCI). In mid 2011 PT. LCI built a new cement factory with a capacity of 1.5 million tons per year. The new factory was built with an investment of Rp 5 trillion in Langkat, North Sumatra. PT. LCI chose the location in Langkat as it has large reserve of basic material enough to supply it for 30 years.

PT. Semen Bosowa Maros (BSM) in 2011 started construction of a new factory with a capacity of 1 million tons of cement per year. The new factory is located in Maros, South Sulawesi built with an investment of US$70 million including the cost of buying a cement ship at a price of US$ 50 million.

Currently SBM has factories in Maros and Batam with a total production capacity of 3.5 million tons per year. The capacity addition from the new factory will bring the total capacity of the company to 4.5 million tons per year.

There are also new investors in cement industry in the country. Siam Cement Group from Thailand through local unit, PT Semen Jawa, built a new factory with a capacity of 1.8 million tons per year. The factory is located in Sukabumi, West Java with an investment of US$300 million. The factory is to start operation by the end of 2012 and its entire production would be for domestic consumption.

Anhui Conch Cement Company Ltd or Conch Group from China plans to build 4 factories in Kalimantan and Papua with a total investment of US$ 2.35 billion.

China Trio International Engineering Co Ltd from China will build a cement plant with a capacity of 1.5 million tons per year in Subang, West Java.

State Development and Investment Corp will build a cement factory in Papua with a capacity of 1 million tons per year.

A cement factory needs large power supply. Around 112 kWh (kilowatt per hour) are needed to produce a ton of cement. An addition of capacity of 5.38 million tons, therefore, will need additional supply of 602.56 megawatt (MW) of electricity. To support expansion of capacity, cement producers have to build own power plants as supply from PLN is not always reliable.


Energy is a major cost component for cement industry. An increase in energy price would push up the production cost of cement.

The prices of cement on the domestic market rose 10 percent on the average early in 2012. The increase in the electric tariff would push up the price of cement.

ITP has power plants to meet 20 percent of its total energy requirement. ITP has always maintained the position of a price leader in main markets resulting in slower growth of the company in sales especially when the prices are on the decline.


Cement marketing in Indonesia is determined by the location and the production capacity of the factory. Location is determinant as the transport cost could be higher than the value of the real cement when it is too distant to the market.

The production capacity of a cement factory is also determinant in the capacity to supply the market.

Big producers including GSG plan rationalization of the market by dividing the markets considering the transport cost and production cost. Market division would place PT. SG among the SGS members as the main supplier for Java and the Riau Islands especially Batam.

The Batam market is supplied from Tuban as the transport cost is 75 percent cheaper than from Semen Padang.

Semen Tonsasa will strengthen its market foothold in Sulawesi, and eastern Indonesia and Semen Padang will be the main supplier for export markets mainly East Asia and Middle East. Buyers in East Asia and Middle East will be served Semen Padang.

The distribution system of SG is supported by 30 units of warehouse in strategic areas with 15 packing plants to facilitate distribution all over Indonesia.

Meanwhile, 95% of Holcim's cement production is disposed of in Java market amid the increase in transport cost to outer regions.

Java is expected to remain the market target for cement producers on transport efficiency. In 2011, cement sales in Java totaled 26.5 million tons.

PT. Holcim Indonesia (HI) for the time being will concentrate on strengthening its market foothold only in Java. After having two factories--in Narogong (Bekasi, West Java) and Cilacap (Central Java--HI will build its third factory in Tuban, East Java to be completed in 2013. The additional capacity will be used to supply cement to East java, Bali and Kalimantan.

Currently PT. HI is seeking to expand its market by strengthening its distribution systems.

HI is focused more on dealing with retail market than corporate buyers. Before being acquired by Holcim, Semen Kujang concentrated marketing more on projects and Semen Nusantara was focused more on retail market.

Semen Kujang, however, failed to expand as it was confronted with big competitors. After being acquired by Holcim it has changed marketing focus to retail markets, although retail market has also been crowded with brands belonging to big producers like semen Gresik of PT. SG and semen Tiga Roda of PT. ITP.

HI offers franchise partnership to investors interested in cooperation to develop retail business opening building material stores with the brand of Solusi Rumah. Consumers could consult with the stores on designs of new houses or on renovation of houses. The house to be built using Solusi Rumah is faster and 20% cheaper, HI said.

The investing partner could buy the franchise at prices ranging from Rp50 million to Rp700 million covering all consultation on house construction. The partners will be trained and they are expected to recover their investment in 3.5 years. Until 2011, there were 270 outlets of Solusi Rumah in Java. Under this concept HI targets to open new outlets to bring the total number to 400 units in 2012.

A subsidiary of HI, PT Holcim Betons, offers franchise system in concrete industry in Indonesia. Investment needed to open a franchise is around Rp3.5 billion. With the investment an investor could produce 24,000 cubic meters of concrete per year. HI also provides technical support to run the concrete business. The investor is required to pay Rp150 million in joint fee in 5 years and 2% of the nest sale.


The GSG was the market leader in 2011 with a market share of 40.8 percent, followed by ITP with a market share of 31.5 percent and HI with a market share of 15.5 percent.

In 2011, Semen Tonsasa, a member of the GSG had a market share of 7.9% dominating the market in eastern Indonesia (KTI).

Producers having a market share of less than 15 percent with capacity utilization of less than 80% like PT. SB, and PT. BSM could still increase their market share by optimizing their capacity.

However, such steps is effective only in short term especially as big producer like GSG also plans to increase its production capacity to 23.9 million tons in 2012. Increasing market share in long term could be made by expansion of production capacity such as planned by PT. HI.

With capacity of 20.6 million tons in 2011, GSG was the largest cement producer in the country. In 2011, GSG had a market share of 40.8%. In 2012, GSG is set to increase sales by 15.3% to 22.6 million tons.

GSG and ITP remain close rivals in the market. ITP recorded an increase in sales to 15.1 million tons in 2011 from 12.6 million tons in the previous year. Sales by PT. SG in 2011 totaled 9.9 million tons up from 8.9 million tons in the previous year.


Cement consumption in the country is expected to continue to increase form year to year especially there is substitute for cement. Demand will increase especially from the construction and property sectors.

Consumption is forecast to grow 6% a year to follow the trend of economic development. The annual growth is quite healthy for the industry.

A number of big producers have drafted plan for capacity expansion until 2013 through construction of new factories. Among the new factories is Tonsasa V of Semen Tonasa with a capacity of 2.5 million tons to be operational in 2011, Tuban V with a capacity of 2.5 million tons of Semen Gresik to be operational in 2012, Indocement to have a new factory with a capacity of 1.5 million tons in Citeureup to be operational in 2012.

A cement factory needs to have a production capacity of 2.5 million tons per year to be feasible at present. Investment per ton of production is US$ 125 that a factory will need an investment of US$ 312.5 million.

Construction of a new cement factory will take 2 to 3 years depending on the capacity. Investors will build a factory to be operational at a time when demand is at least level with the country's total capacity. The positions of capacity and demand are expected to remain unchanged for five years after the factory comes on line. Too large capacity will add burden in maintenance cost and opportunity cost.

Based on assumption that demand for cement will grow 5 percent a year until 2015, with exports 3.5 million tons a year, the production capacity of a factory 2.5 million tons a year and capacity utilization averaging 95 percent, and capacity expansion needed every 2-3 years, capacity expansion would be needed in 2013 and 2015 by 2 million-5 million tons a year.
Types of cement produced in Indonesia

Type of             Characteristic            Uses

Portland                                      This type of cement is
Type I                                        used for general
                                              construction like
                                              houses, multi storey
                                              buildings, bridges,
                                              roads, and as
                                              feedstock for asbestos
                                              and ferro cement.

Portland            Better resistance to      Used for buildings
Type II             sulfate                   located in areas
                                              closed to water such
                                              as ports, quay, dams,

Portland            Dry quickly and hard      Used for buildings
Type III            to sustain high           needing strength to
                    pressure.                 sustain early high
                                              pressure after casting
                                              and fast completion
                                              such as road
                                              construction, bridges
                                              and airports.

Portland                                      Used for construction
Type IV                                       which needs low
                                              hydration heat such as
                                              big dams, thick
                                              concrete construction
                                              in dry locations.

Portland            Providing better          Used for construction
Type V              protection against        of pools for chemical
                    corrosion from water      industrial waste,
                    and soil containing       buildings in sea,
                    sulfate more than         etc.

Oil Well            Could harden normally     Used for construction
Cement              in oil wells having       of oil and gas wells
                    high temperature          having certain depth.

Portland            Easily used, lower        For general concrete
Composite Cement    temperature in            construction, with
                    building concrete will    stone and bricks,
                    reduce cracks, the        cementing, gutters,
                    surface of the            roads, concrete
                    concrete smoother         fences, pre stressed
                    , water resistant,        buildings,
                    sulfate resistant  and    prestressed concrete,
                    having high capacity      concrete panels,
                    to sustain pressure.      paving blocks, etc.

Portland            Resistant to sulfate      For two-three floor
Pozzolan Cement     and moderate hydration    buildings, general
                    heat                      concrete construction
                                              , mass concrete
                                              construction like full
                                              plate foundation and
                                              dams, building
                                              construction in
                                              coastal areas swampy
                                              area and buildings on
                                              ground containing
                                              aggressive sulfuric
                                              salt and building
                                              construction needing
                                              high water tightness
                                              such as sanitation
                                              construction, water
                                              construction and water
                                              pools or reservoirs.

White Cement        Bright color              Used as material for
                                              terrazo tiles, or as
                                              cement for laying
                                              ceramics and other
                                              decorative ornaments

Super Masonry       Housing construction      Used in the production
Cement              and water works with      of hollow brick tiles,
                    concrete structure of     paving block, and
                    not more than K225        floor tiles

Sources: Indonesian Cement Association (ASI), Data Consult

Production capacity of Indonesia's cement industry,

             Capacity ('000 tons/year)

Year     Clinker      Cement     Growth (%)

2002      44,425      47,490            --
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
2010      43,257      53,010          10.5
2011      43,670      56,820           7.2
Rata-rata                              2,1

Sources: ASI, Data Consult processed

Factories owned by Semen Gresik Group

Name of companies          Number of          Total production
                       factories (units)   capacity (million tons)

PT. Semen Gresik               3                    9.7
PT. Semen Padang               4                    6.3
PT. Semen Tonsasa              3                    4.6
Total                         10                   20.6

Sources : PT. Semen Gresik

Shareholders' composition of Semen Gresik, 2011

Shareholders                   %

The Indon. government        51.01
Blue Valley Holdings, Pte    24.90
Public                       24.09

Sources: Semen Gresik, Data Consult processed

Shareholders of PT. HI

Shareholders                %

Holcim                    77.33
Public and creditors      22.67

Sources: Data Consult

Factories owned by ITP, 2011

Name of factories       Number of           Total production
                    factories (units)    capacity (million tons)

Citeureup                   9                     15,9
Palimanan                   2                      2,6
Tarjun                      1                      2,6
Total                      12                     21,1

Sources : PT. Indocement Tunggal Prakarsa

Shareholders of ITP, 2011

Shareholders           Number of shares (units)       %

Birchwood Omnia Ltd          1,877,480,863          51.00
PT Mekar Perkasa               479,735,234          13.03
Public                       1,324,015,602          35.97
Total                        3,681,231,699         100.00

Sources: PT. Indocement Tunggal Prakarsa

Cement producers in Indonesia and capacity, 2011
('000 tons)

Companies                                  Coming    Clinker   Cement
                                           on line

PT. Semen Gresik, Tbk                       1957      7,880     9,700
PT. Semen Padang                            1910      5,610     5,410
PT. Semen Tonsasa                           1968      3,680     4,600
PT. Holcim Indonesia/ ex. PT. Semen         1975      6,400     8,700
PT. Indocement Tunggal Prakarsa, Tbk        1975     15,600    21,100
PT. Semen Bosowa Maros                      1999      1,800     3,000
PT. Lafarge Cement Indonesia                1982      1,200     1,600
  (formerly PT. Semen Andalas)
PT. Semen Baturaja                          1980      1,200     1,250
PT. Semen Kupang                            1984        300       570
Total                                                43,670    56,820

Sources: ASI, Data Consult processed

Coal requirement for cement industry

Year          Coal requirement
               (million tons)

2008                 6
2009                 7
2010               7.6
2011               8.8

Sources: ASI

Indonesia's cement production, 2002-2011

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

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

2002     44,425      47,490    33,248     -1,9        75
2003     44,425      47,490    32,629     -1,9        73
2004     43,340      47,490    34,886      6,9        80
2005     42,690      46,090    34,004     -2,5        80
2006     40,730      44,890    34,970      2,8        86
2007     40,730      44,890    35,914      2,7        88
2008     39,288      44,010    37,680      5,1        96
2009     40,899      47,975    35,375     -6,1        86
2010     43,257      53,010    34,515     -2,4        80
2011     43,670      56,820    37,539      8,8        86

        ('000 tons)

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

2002     30,720      -1.2         65
2003     30,647      -0.2         65
2004     33,230       8.4         70
2005     33,917       2.1         74
2006     33,032      -2.6         74
2007     35,033       6.1         78
2008     38,303       9.3         87
2009     36,906      -3.6         76
2010     39,475       6.9         74
2011     45,237      14.6         80

Sources: ASI, ICN processed

Production of cement by companies, 2010-2011

(000 tons)

Producers                               2010      2011

PT. Lafarge Cement Indonesia               --        --
PT. Semen Padang                        5,676     6,152
PT. Semen Baturaja                      1,131     1,241
PT. Indocement Tunggal Prakarsa Tbk    12,638    15,102
PT. Holcim Indonesia, Tbk               5,618     7,131
PT. Semen Gresik, Tbk                   8,939     9,792
PT. Semen Tonsasa                       3,661     3,887
PT. Semen Bosowa Maros                  1,812     1,933
PT. Semen Kupang                           --        --
Total                                  39,475    45,238

Source: ASI, Data Consult processed

Producers and market share, 2011

Producers                                Production      Share
                                       (million tons)     (%)

PT. Semen Andalas                            --
PT. Semen Padang                            6.2          13.6
PT. Semen Baturaja                          1.2           2.7
PT. Indocement Tunggal Prakarsa Tbk        15.1          33.4
PT. Holcim Indonesia, Tbk                   7.1          15.8
PT. Semen Gresik, Tbk                       9.8          21.6
PT. Semen Tonsasa                           3.9           8.6
PT. Semen Bosowa Maros                      1.9           4.3
PT. Semen Kupang                             --            --
Total                                      45.2         100.0

Sources: ASI/ICN processed

Domestic sales, exports and imports of cement, 2002-2011

                Total sales n ('000 tons)
                            Exports                        (000 tons)
         Domestic                       Total    Total
Year      sales     Clinker   Cement   Exports    sales

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
2010      43,683     2,141     763      2,904    46,587        --
2011      49,162      959      203      1,162    50,324        --

Sources: ASI, BPS, processed by Data Consult

Exports of clinker and cement by countries of destination,

(000 tons)

Countries of destination       2010         2011

Srilanka                        440,5         61,2
Bangladesh                      451,1        520,6
Malaysia                        651,8        136,1
Mauritius                       240,0           --
Ghana                           286,4           --
Australia                       322,0        218,3
Madagascar                      112,9          7,4
Timor Leste                      98,8        121,6
Sub total                     2.603,5      1.065.2
Other countries                 301,2          127
Total                         2.904,7      1.192,2

Sources: ASI

Domestic consumption of cement, 2002-2011

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

2002            27,233             ---             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
2010            40,778             6.1             172
2011            47,999            17.7             200

Sources: ASI, ICN

Domestic consumption of cement by provinces, 2009-2011

(000 tons)

Regions            Provinces           2009        2010        2011

Sumatra                                 8.872       9.690      11.028
              Aceh                        958         877         854
              North                     2.317        2.55       2.717
              West Sumatra                705         927       1.025
              Riau                        876         993       1.316
              Riau Island                 701         686         720
              Jambi                       383         462         485
              South Sumatra             1.159       1.212       1.422
              Bangka Belitung             263         318         390
              Lampung                   1.021       1.141       1.504
              Bengkulu                    491         524         595

Java                                   21.126      21.920      26.515
              Jakarta                   3.529       3.707       4.630
              Banten                    1.837       2.005       2.779
              West Java                 5.479       5.737       7.061
              Central Java              4.486       4.433       5.303
              Yogyakarta                  601         613         763
              East Java                 5.194       5.426       5.979

Kalimantan                              2.436       2.872       3.361
              West Kalimantan             554         638         846
              South Kalimantan            631         713         838
              Central Kalimantan          326         453         506
              East Kalimantan             925       1.068       1.171

Sulawesi                                3.003       3.046       3.527
              West Sulawesi                38          68         345
              South east Sulawesi         297         343       1.877
              South Sulawesi            1.669       1.573          85
              Central Sulawesi            396         419         482
              North Sulawesi              472         493         574
              Gorontalo                   131         149         163

Nusa                                    2.174       2.335       2.779
Tenggara      Bali                      1.102       1.142       1.372
              West Nusa Tenggara          647         626         682
              East Nusa Tenggara          424         566         724

Maluku                                    802         914         791
& Papua       Maluku                      330         242         246
              North Maluku                 --         132         147
              West Papua                   --          28          37
              Papua                       419         511         361

Total Indonesia                        38.413      40.778      47.999

Regions            Provinces          Growth     Growth     Growth
                                     (%)2009    (%) 2010   (%)2011

Sumatra                                 -0.5        9.2       13.8
              Aceh                      -8.2       -8.4       -2.7
              North                      6.2       10.0        6.6
              West Sumatra             -12.0       31.5       10.7
              Riau                      -2.1       13.4       32.5
              Riau Island               -7.9       -2.1        4.9
              Jambi                      3.6       20.6        5.1
              South Sumatra              4.4        4.6       17.3
              Bangka Belitung           -0.1       20.8       22.9
              Lampung                   -4.6       11.9       31.8
              Bengkulu                  14.6        7.0       13.4

Java                                     2.4        0.7       21.0
              Jakarta                   -2.9        5.0       24.9
              Banten                    -9.9        9.1       38.6
              West Java                  2.7        4.7       23.1
              Central Java               9.6       -7.0       19.6
              Yogyakarta               -16.6        2.0       24.4
              East Java                  7.4       -2.2       10.2

Kalimantan                              -0.1       17.9       17.0
              West Kalimantan           -1.3       15.2       32.6
              South Kalimantan           7.3       13.0       17.6
              Central Kalimantan       -10.1       38.7       11.6
              East Kalimantan           -0.2       15.5        9.6

Sulawesi                                15.7        1.5       15.8
              West Sulawesi              --        80.7      407.9
              South east Sulawesi       17.3       15.3      447.8
              South Sulawesi            21.4       -5.7       94.8
              Central Sulawesi           8.9        5.8       15.0
              North Sulawesi            -0.4        4.5       16.3
              Gorontalo                  0.2       14.3        9.2

Nusa                                     7.8        7.3       19.0
Tenggara      Bali                       2.1        3.3       20.1
              West Nusa Tenggara        13.4       -3.2        8.9
              East Nusa Tenggara        14.7       33.6       27.9

Maluku                                  -5.5       13.9      -13.5
& Papua       Maluku                  -16..6      -26.5        1.5
              North Maluku                --      213.2       11.1
              West Papua                  --      142.1       33.4
              Papua                     -7.6       22.1      -29.5

Total Indonesia                          2.6        4.4       17.7

Sources: ASI, ICN processed

New cement factories and expansion units, 2012-2014

Name of                    Location            Production capacity
company                                          (tons per year)


PT. Semen           Pangkep, South            Cement-2,5 million
Tonsasa             Sulawesi

PT. Semen           a.Tuban, East Java        Cement-2,5 million
Gresik              b. Papua                  -Cement-600,000
                                              Packing plant and Silo
                                              -Quay-150 meters

PT. Semen           Indarung, West Sumatra    Cement-2.3 million

PT. Semen           a.Baturaja, South         Cement mill-300,000
Baturaja            Sumatera                  Cement-1 million
                    b. Muara Dua, South

PT. Indocement      a.Citeureup, West Java    Milling
Tunggal Prakarsa    b.Bau-bau, Southeast      cement-2 million
Tbk                 Sulawesi                  Cement-1.9 million

PT. Holcim          Tuban, East Java          Cement-
Indonesia Tbk                                 1.7 million

PT. Lafarge         Langkat, North Sumatra    Cement-1.5 million
Cement Indonesia

PT. Semen           Maros, South Sulawesi     a. Cement-1 million
Bosowa Maros                                  b. Cement transport

New Investment

PT. Semen Jawa      Sukabumi, West Java       Cement-1.8 million
(acquired PT.
Jaya Boral

PT. Semen           Karawang, West Java       Cement-1,0 million

Anhui Conch         South Kalimantan          Cement-10 million
Cement Co Ltd of

China Trio          Subang, West Java         Cement-1.5 million
Engineering Co
Ltd of China

State               Papua                     Cement-1 million
Development and
Investment Corp

PT. Semen           Grobogan, Central Java    Cement-1.5 million

Name of                Investment       Start-up
company                                   year


PT. Semen           US$ 375 million       2012
Tonsasa             (Rp 3,2 trillion)

PT. Semen           Rp 3,5 trillion       2012
                    Rp 1, 2 trillion      2013

PT. Semen           N.a                   2012

PT. Semen           Rp 350 billion        2012
                    N.a                   2012

PT. Indocement      N.a                   2013
Tunggal Prakarsa
Tbk                 N.a                   2014

PT. Holcim          US$ 450 million       2013
Indonesia Tbk

PT. Lafarge         Rp 5 trillion         2013
Cement Indonesia

PT. Semen           US$ 70 million        2013
Bosowa Maros        US$ 50 million

New Investment

PT. Semen Jawa      US$ 300 million       2013
(acquired PT.
Jaya Boral

PT. Semen           N.a                   2013

Anhui Conch         N.a                   2014
Cement Co Ltd of

China Trio          N.a                   2014
Engineering Co
Ltd of China

State               N.a                   2014
Development and
Investment Corp

PT. Semen           N.a                    N.a

Sources: Industry ministry

Cement prices on domestic market, April-Mei 2012

Name of producers         Brands          Price per sack

PT. Indocement Tunggal    Tiga Roda       Rp 55,000
Prakarsa Tbk                              Rp 73,000 (white cement)

PT. Semen Gresik Tbk      Semen Gresik    Rp 53,500

PT. Holcim Indonesia      Holcim          a, Rp 42,000 (40 kg)
                                          Rp 54,000 (50 kg)

PT. Semen Padang                          a, Rp 49,000 (40 kg)
                                          b, Rp 51,000 (50 kg)

Sources: ICN processed

Market shares of cement producers in Indonesia, 2011

                   Domestic sales

Companies             2010      Share       2011      Share    Growth
                                 (%)                   (%)       (%)

PT. Indocement     12,582,611    30.9    15,121,873    31.5      20.2
rakarsa, Tbk

PT. Semen          8,911,382     21.9    9,974,480     20.8      11.9

PT. Holcim         5,564,459     13.6    7,463,309     15.5      34.1

PT. Semen          5,260,192     12.9    5,820,858     12.1      10.7

PT. Semen          3,468,614      8.5    3,789,655      7.9       9.3

PT. Semen          2,253,582      5.5    2,790,730      5.8      23.8
Bosowa Maros

PT. Lafarge        1,597,381      3.9    1,736,708      3.6       8.7
Cement Indonesia

PT. Semen          1,139,644      2.8    1,253,839      2.6      10.0

PT. Semen                 --       --       48,442      0.1        --

Sources: ASI, ICN

Estimate of expansion of production capacity,

(000 tons)

Year    Existing    Additional      Domestic
        Capacity     capacity     requirement

2012     60,569        3,749         53,435
2013     63,597        3,328         56,281
2014     66,220        2,623         58,085
2015     70,220        4,000         58,995
2016     73,029        2,809         61,496

Year     Exports    Production        Cap.

2012      3,500       56,935           94
2013      3,500       59,781           94
2014      3,500       61,585           93
2015      3,500       62,495           89
2016      3,500       64,996           89

Sources: ICN processed
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Publication:Indonesian Commercial Newsletter
Date:Apr 1, 2012
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