Semen Indonesia IDR6trn expansion

Semen Indonesia has designated IDR6trn (US$449.1m) for capital expenditure in 2017 to finance its expansion programme. The programme includes the development of four plants set to add 10.5Mta to the company’s current installed capacity of 32.3Mta. Two plants are already under construction.

Approximately IDR1trn of the year’s spending will be channelled into the construction of the Rembang plant in Central Java and the Indarung VI plant in Padang, West Sumatra, which have both entered into their final stage, according to Semen Indonesia Corporate Secretary, Agung Wiharto.

The Aceh works, slated for completion in 2019, may need an investment of at least IDR3trn while the Kupang plant in East Nusa Tenggara will require IDR2trn and is set for completion in 2020. Investment will also be made into construction of two packaging plants in Bengkulu and Maluku, as well as a 30MW waste heat power plant in Tuban, East Java.

According to Mr Wiharto, "Around 60 to 70 per cent of those investments will be externally funded, while the rest will be managed internally." Semen Indonesia may need external funds worth IDR2-3tr in 2017 for the projects in question, which may be sourced from the issuance of bonds or syndicated bank loans, he added.

Mr Wiharto spoke on the outlook for the domestic industry, estimating cement demand to climb at least five per cent to 70Mt compared to last year. In the 9M16 Semen Indonesia registered IDR2.9trn in net profit, representing an 8.4 per cent decline from 9M15.