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Semen Indonesia plans $200m plant in Myanmar

Indonesia’s largest cement producer PT Semen Indonesia Tbk (SMGR) says it will build a US$200 million cement plant in Myanmar early next year as part of its expansion into the Southeast Asian market

Linda Yulisman (The Jakarta Post)
Jakarta
Tue, March 26, 2013

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Semen Indonesia plans $200m plant in Myanmar

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ndonesia’s largest cement producer PT Semen Indonesia Tbk (SMGR) says it will build a US$200 million cement plant in Myanmar early next year as part of its expansion into the Southeast Asian market.

The company may pitch about $70 million for the plant, which it would set up with its Myanmar partners, as it aimed to control about a 40 percent stake in the planned joint venture, president director Dwi Soetjipto said on Monday.

“Out of the [$70 million], we may need between $40 million and $50 million in funds [from loans],” he told reporters after a discussion on the cement industry’s outlook in Jakarta.

The rest would be internal cash but the company had also opened up the possibility of issuing bonds, he went on.

The construction of the cement plant, designated with a capacity of 1 million tons per year, is scheduled to start early next year, while operations are expected to begin in 2017, according to Dwi.

Based on the firm’s plan, the new plant will serve the Myanmar market and neighboring countries like Thailand and Bangladesh.

The proposed plant in Myanmar, which is modernizing its economy after decades of harsh military rule and is poised for rapid growth, is Semen Indonesia’s latest expansion plan into the regional market after Vietnam, in line with its intention to become a top regional player following the change of its name from Semen Gresik.

Late last year, the firm acquired Vietnam’s largest cement producer, Thang Long Cement Joint Stock Company, from the Hanoi General Export-Import Joint Stock Company (Geleximco) and now aims to expand its annual capacity to 6.5 million tons from 2.3 million tons by establishing two new plants.

Apart from overseas expansion, Semen Indonesia is also gearing up for its domestic capacity upgrade, which will be carried out through the construction of cement plants in Rembang, Central Java, and Padang, West Sumatra, both with production capacities of over 2.5 million tons.

This year, the firm targeted up to a 44 percent share of the domestic cement market, up from 41 percent last year, supported by increased output to around 27 million tons from 22.6 million tons last year, according to Dwi.

The overall domestic cement market is estimated to increase by more than 10 percent to 61 million tons this year, according to the Indonesian Cement Association (ASI).

As Indonesia’s domestic cement consumption is still low at around 220 kilogram per capita, major cement makers are also planning expansions to tap the potential in Southeast Asia’s largest economy.

Indonesia’s second largest cement maker, publicly-listed PT Indocement Tunggal Perkasa Tbk, for example, also plans to expand its annual capacity to 25 million tons by mid-2015, from 18.6 million tons at present, by setting up a new plant in Citeureup, West Java.

On Monday, it signed a contract with the Tianjin Cement Design and Research Institute (TCDRI), a subsidiary of China-based Sinoma Group, for a production equipment procurement for its new plant, which will be the largest cement plant in Indonesia with an annual capacity of 4.4 million tons. (koi)

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