Semen Gresik to cut exports by 25 percent

The Jakarta Post ,  Jakarta   |  Fri, 03/10/2006 7:52 AM  |  Business

The country's cement market leader, Semen Gresik (SG), will reduce its cement exports by 25 percent to 1.5 million tons this year to meet a surge in demand on the domestic market.

""The cut in the export volume is inevitable as the greater part of our production will be allocated to meeting the surge in demand at home,"" the company's finance director, Cholil Hasan, told reporters Thursday.

SG, which produces cement through its subsidiaries PT Semen Padang in West Sumatra, and PT Semen Tonasa in South Sulawesi, is 51 percent owned by the government, 25.5 percent by Mexican firm Cemex and 23.5 percent by retail investors. The company controls about 45 percent of the domestic cement market.

Cholil estimated that national cement demand would rise by about 6 percent to 40.5 million tons this year from 38.2 million tons last year.

""We also plan to increase our production (including those from Semen Padang and Semen Tonasa) by about 6 percent this year from 16.38 million tons in 2005 to keep up with the demand,"" he said.

Cholil said selling on the domestic market was more profitable as the average domestic price of US$65 per ton was higher than the international price, which stood at about $35.

""If we had a bigger production capacity, we would, of course, export more,"" he said, adding that the company planned to build a new plant this year.

The company also needs additional funds this year to repurchase bonds worth Rp 409 billion, which are due to mature this year.

Cholil said that SG had no plans to increase cement prices as any increase in prices would lead to an increase in house prices, which were already too high for most of Indonesians, he said.

""Thus, raising prices would in the end hurt the demand for cement,"" he said. (06)

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