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Semen Gresik inks deal for new plant
Cementing a deal: Publicly listed Semen Indonesia president director Dwi Soetjipto (center) signs an agreement on non-cash loan facilitation, witnessed by (from left) Semen Gresik finance director Sunardi Prionomurti, Semen Gresik president director Gatot Kustyadji, state lender Bank Mandiri director Abdul Rachman and Semen Indonesia finance director Ahyanizzaman, in Jakarta on Friday
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Cementing a deal: Publicly listed Semen Indonesia president director Dwi Soetjipto (center) signs an agreement on non-cash loan facilitation, witnessed by (from left) Semen Gresik finance director Sunardi Prionomurti, Semen Gresik president director Gatot Kustyadji, state lender Bank Mandiri director Abdul Rachman and Semen Indonesia finance director Ahyanizzaman, in Jakarta on Friday. Semen Gresik, a subsidiary of Semen Indonesia, will receive a non-cash loan facility worth Rp 1.4 trillion (US$122.53 million) from the lender, with maturity of 42 months, to build a new 3 million-ton cement mill in Rembang regency, Central Java. (Antara/Audy Alwi) (center) signs an agreement on non-cash loan facilitation, witnessed by (from left) Semen Gresik finance director Sunardi Prionomurti, Semen Gresik president director Gatot Kustyadji, state lender Bank Mandiri director Abdul Rachman and Semen Indonesia finance director Ahyanizzaman, in Jakarta on Friday. Semen Gresik, a subsidiary of Semen Indonesia, will receive a non-cash loan facility worth Rp 1.4 trillion (US$122.53 million) from the lender, with maturity of 42 months, to build a new 3 million-ton cement mill in Rembang regency, Central Java. (Antara/Audy Alwi)
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span class="inline inline-none">Cementing a deal: Publicly listed Semen Indonesia president director Dwi Soetjipto (center) signs an agreement on non-cash loan facilitation, witnessed by (from left) Semen Gresik finance director Sunardi Prionomurti, Semen Gresik president director Gatot Kustyadji, state lender Bank Mandiri director Abdul Rachman and Semen Indonesia finance director Ahyanizzaman, in Jakarta on Friday. Semen Gresik, a subsidiary of Semen Indonesia, will receive a non-cash loan facility worth Rp 1.4 trillion (US$122.53 million) from the lender, with maturity of 42 months, to build a new 3 million-ton cement mill in Rembang regency, Central Java. (Antara/Audy Alwi)
Cement producer PT Semen Gresik, subsidiary of state-owned PT Semen Indonesia, has secured a letter of credit (L/C) facility to help finance the construction of its newest plant.
The facility agreement, worth Rp 1.4 trillion (US$122.53 million), was signed on Friday by Semen Gresik president director Gatot Kustyadji and state lender Bank Mandiri institutional banking director Abdul Rachman.
Under the deal, Mandiri agrees to issue L/Cs for Semen Gresik for the next 42 months to support the latter's machinery or equipment purchases from overseas.
The machinery and equipment will be used to construct Semen Gresik's new plant in Rembang, Central Java.
The plant worth Rp 3.7 trillion is expected to commence operations in 2016 and will have an annual production capacity of 3 million tons.
Speaking on behalf of Semen Gresik, Semen Indonesia finance director Ahyanizzaman ' who goes by one name only ' said the company actually planned to use its internal cash to finance the construction of the Rembang plant.
He said, however, the company had opted to obtain an L/C facility only to make relatively easier purchases from overseas.
'We will not be burdened by interest and our foreign partners will get assurances that the purchases will be carried out with fidelity because we have a bank backing us up,' he said.
He added that the company would only make a 'conventional' loans agreement with Mandiri later this year to help finance the expansion of its Indarung manufacturing facilities in Padang, West Sumatra.
The facilities are operated by subsidiary PT Semen Padang and are currently able to produce up to 6.5 million tons of cement per year.
'We are looking to increase the annual capacity by 3 million tons and the project will need around Rp 3.2 trillion in investment,' Ahyanizzaman said.
'About half of the costs will be financed by our internal funds and the rest by a syndicated loan, led by Mandiri.'
Supported by the Rembang and Indarung plants, Semen Indonesia's total production capacity will surge to 40 million tons by 2017, from the 31.8 million tons forecast for this year.
Meanwhile, Rachman with Bank Mandiri said that the lender's L/C and trade finance business prospects remained positive in 2014, with 10 to 15 percent growth.
'The textile and electronics sectors will still dominate the issuance of L/Cs,' he said.
'We are also seeing growth in the production of spare parts for automotive and construction industries,' he added.
According to Mandiri's latest financial report, the lender booked $133 billion in trade transactions in 2013, generated from 520,948 transactions.
The trade value rose 6.4 percent year-on-year and the transaction volume surged slightly by 0.7 percent.
Rachman added that Mandiri would also focus on boosting trade transactions to assist various projects under the government's Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI).
