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T Cemindo Gemilang, a majority shareholder of a Vietnamese cement producer, plans to spend up to US$600 million to build a cement plant in Banten.

President director Aan Selamat said in Jakarta on Tuesday that Cemindo, a subsidiary of oil palm plantation, mining and property business holdings Ganda Group, would carry out the plant'€™s groundbreaking on Wednesday.

The plant will occupy a 500-hectare plot of land in Bayah, Lebak regency, Banten.

He said construction of the plant would absorb around three-fourths of total investment, or equal to $450 million.

'€œWe picked this area because we want to build an integrated plant and at this location we can find abundant raw materials to help future operations,'€ Aan told reporters in a press briefing.

The plant, which is expected to begin commercial operations in the third quarter of 2015, will have a production capacity of 4 million tons a year, he said, adding that the output would be distributed in Banten, Greater Jakarta and West Java.

Aan further said that the firm would spend the remaining $150 million on necessary infrastructure, particularly a port to support its output delivery and power network.

According to Cemindo'€™s plan, it will develop a port with a depth of 13 meters to accommodate vessels with a capacity of up to 30,000 dead weight tonnage (DWT). It will also source electricity totaling 60 megawatts from the PLTU Pelabuhan Ratu coal fired power plant.

Cemindo will finance the entire project with external and internal funds. The majority funds, representing 70 percent of total investment, will be obtained from a syndicated loan led by publicly listed state-owned Bank Negara Indonesia (BNI).

Ganda Group is owned by Ganda Sitorus, the brother of Martua Sitorus, co-founder of Singapore-listed Wilmar International, which is the world'€™s biggest palm oil processor and one of the biggest sugar producers.

Last year, Cemindo acquired the majority stake in Vietnamese cement producer Chinfon Cement Corporation for S$250 million. Chinfon produces about 4.5 million tons a year. Last year, it sold about 1 million tons of cement under the '€œSemen Merah Putih'€ brand in 20 provinces in Java, Kalimantan and Sumatra, raking in $100 million in revenue.

Aan said that operation of the new plant would later support Cemindo'€™s target to control at least an 8 percent share in the country'€™s cement market, with annual sales of $400 million by 2015. The overall domestic cement market is estimated to expand by more than 10 percent to 61 million tons this year, according to the Indonesian Cement Association (ASI).

At present, Cemindo also operates a plant under a joint cooperation scheme with state-owned cement maker PT Semen Kupang through its subsidiary, PT Sarana Agra Gemilang. The 10-year scheme, which will end in the next seven years, has allowed the ailing Semen Kupang to revive its operations. Semen Kupang'€™s plant now produces 360,000 tons of cement each year, fulfilling the cement demand in East and West Nusa Tenggara.