Gresik sees regional expansion costing US$400m-500m

Indonesia's largest cement producer, PT Semen Gresik, says its planned expansion into Vietnam and Myanmar can be realised by year-end.

Semen Gresik president director Dwi Soetjipto said that expansion into the fellow ASEAN member nations would need US$400m to US$500m.

“We will need about US$150m to set up a factory for Myanmar," Dwi said after the company¹s annual and extraordinary meeting of shareholders on Tuesday. According to him, Gresik has been assessing potential local partners for a joint venture for a plant in Myanmar to produce around 600,000tpa of cement.

Dwi declined to discuss Vietnamese expansion plans in detail, hinting at an acquisition. “We are now bound by a non-disclosure agreement. We hope to come up with decision whether to continue or cancel by the year end,” Dwi said.

Semen Gresik intends to finance 20 per cent of the expansion with internal cash and the remainder with external sources, possibly from a global bonds issue. Dwi said that if negotiations concluded by year-end, Semen Gresik would likely issue bonds in 2013. Finance director Ahyanizzaman said that Semen Gresik was reviewing alternatives.

Semen Gresik, according to Dwi, expected to book a 15 per cent revenue increase in 2012, or about IDR18trn, as the company reported revenues of IDR16.38trn last year, and expected strong growth from increased capacity following completion of two cement plants, Tuban IV and Tonasa V. Dwi said that Semen Gresik targeted to sell 22.5Mt of cement this year, up from last year¹s 19.72Mt.