Semen Indonesia outlines 2015 capex

Semen Indonesia has earmarked US$500m in capex next year in anticipation of an increase in infrastructure projects over the next five years, its president director has said.

Dwi Soetjipto told the Jakarta Post that the state-owned cement producer will use the investments to build or upgrade cement plants and to improve the company’s distribution network. Dwi added that the company aims to produce 40Mta of cement by 2017. He expects demand to jump over the 2014-19 period due to infrastructure projects from the country’s new administration.

Indonesian cement demand growth has slowed over the first half of this year to 3.9 per cent (28.9Mt), partly due to legislative and presidential elections which have resulted in the postponement of many construction projects.

However, the market is expected to pick up during the remainder of this year. The Indonesia Cement Association said it hopes to see improved second-half performance of around 6-8 per cent growth, which would enable the country to record at least a five percentage point increase through 2014.

Funds for Semen Indonesia’s capital expenditure  will come from both internal and external sources, including a loan from Bank Mandiri.

In June, Bank Mandiri, Standard Chartered and Japan’s Sumitomo Mitsui Banking Corporation approved a US$100m syndicated loan to Thang Long Cement, Semen Indonesia’s cement arm  in Vietnam.