Indonesia: PT Semen Indonesia looks to alternative fuels to save jobs

Cost-saving measures other than staff layoffs are considered more efficient in improving company margins as they are challenged by weak demand, according to corporations and consulting firms quoted in The Jakarta Post.

"Our energy-related costs hovered around 60 per cent of overall costs so we prioritised making them more efficient," said Agung Wiharto, corporate secretary of state-owned Semen Indonesia, highlighting energy as the focus of the company’s cost-saving measures.

Semen Indonesia's subsidiary, Semen Gresik, now uses husk and tobacco waste for electricity generation at itsTuban cement plant in East Java. Meanwhile, the Semen Tonasa plant in Pangkep, South Sulawesi, has also replaced coal with coconut shells and cashew-nut waste to reduce production costs.

As a result, Semen Indonesia’s production costs dropped two per cent YoY in the first half of this year to INR7.5trn (US$ 577.5m). At the same time, net profits dropped 10 per cent to INR2trn as a result of a 1.3 per cent decrease in revenue to INR12.5trn amid weak demand and tight competition.

For many plant workers at PT Semen Indonesia, the measures mean that their jobs may be saved. From January to Augst, industrial companies in Indonesia have cut 8733 jobs amid difficult economic conditions, according tot he Manpower Ministry.