The country's cement industry has expanded from year to year to follow the trend in the development of the property and infrastructure sector. The largest consumers of cement in the country are the housing sector.
In 2011, the country's cement production grew 14.4 percent to 45.2 million tons from 39.5 million tons in 2010. The production capacity was recorded at 56,8 million tons per year in 2011 or an increase of t 7.2% from 53 million tons per year in the previous year.
A number of cement producers are seeking to expand their capacity as some of the have been operating almost at full capacity. In addition, demand for cement is expected to continue to grow in the coming years. PT Indocement Tunggal Prakarsa expanded its production capacity by 2.5 million tons to 21.1 million tons per year in 2011. PT. Semen Gresik increased its production capacity by 600,000 tons to 9.7 million tons per year.
The capacity expansion is to keep pace with growing market demand to follow the economic growth and brisker development. In addition some old and inefficient factories need revitalization by replacing machines. Expansion of capacity would improve operation efficiency and make factories more competitive in the market.
Small producers like Semen Kupang, Semen Baturaja, and Semen Bosowa seek to steal a market share in area not covered by big producers such as in eastern Indonesia. Big producers still concentrate in western part of the country mainly in Java which accounts for 55.2 percent of cement consumption in the country. Sumatra is the second largest market of cement accounting for 23 percent, followed Sulawesi and Kalimantan each accounting for 7% of the total consumption.
A number of factors are also considered by investors in building cement factories like the distance of location from market, transport facility and availability of energy or fuel.
Energy is an important factor as energy makes up a considerable part of the production cost. Currently many investors seek to use cheap secondary energy to fuel cement factories.
Currently a critical factor considered in capacity expansion by cement producers is the availability and the price of coal fuel. Cola has been the main fuel for cement factories. Investors or cement producers have asked the government guarantee in coal supply before building new factories . The country is one of the world's largest coal producers but most of its coal production has been exported as the prices are better in international market. In addition many producers have been bound by long term contracts with coal buyers abroad.
TYPES OF CEMENT PRODUCED
There are several types of cement produced in Indonesia. The main type is OPC (Ordinary Portland Cement) or Portland Cement Type I which accounts for 80 percent of the country's total production. Other types include composite and pozzolan cement.
PRODUCTION CAPACITY GROWING 7.2% IN 2011
Based on data at the Indonesian Cement Association (ASI), the country's production capacity increased 10.5% to 53 million tons in 2010 from 47.9 million tons in the previous year. The increase came from five producers expanding their production capacity with an investment of US$ 645.6 million. The new production facilities on line in 2011 included a cement mill of Indocement in Cirebon with a capacity of 1.5 million tons, and reconstruction of the 2004's tsunami destroyed factory of Semen Andalas with a capacity 1.6 million tons in Aceh.
The capacity utilization of the country's cement industry averaged 79.6% in 2011. Privately owned cement factories now are largest in production capacity compared to factories of state companies. They account for 60.5% of the total capacity with state companies having only 39.5% of the total capacity.
In 2011, the country's production capacity rose again to 56.8 million tons or an increase of 7.2%. The additional capacity followed expansion by a number of large producers including France's.Lafarge which built a new factory of PT. Semen Andalas in Lok Nga, Mangrove Aceh Darussalam which came on stream in March 2011 to replace one destroyed by the tsunami in 2004.
Lafarge invested US$300 million to build the new factory with a capacity of 1.6 million tons per year. The factory needs 1.2 million tons of clinker per year.
In 2012, the country's production capacity is expected to rise 6.8 million tons to 63.6 million tons with the construction of new factories by PT Semen Gresik Indonesia, PT Semen Tonsasa, and PT Holcim Indonesia.
The industry ministry has required cement factories to reduce the use of clinker cutting the content from 90% to 80% to be more energy efficient but not reducing the quality to be low SNI.
PT. Semen Gresik, Tbk (PT. SG)
PT. SG has 3 factories located in Tuban and Gresik with a production capacity of 9.7 million tons per year. PT. SG has two ports special for cement in Tuban and in Gresik, 1 unit of cement packing plant in Ciwandan, Banten and 11 units of buffer warehouse Java and Bali . In 2011 cement production PT. SG reached 9.7 million tons.
PT. SG acquired PT. Semen Padang (SP) and PT. Semen Tonsasa (ST) in 1995 to join in the Semen Gresik Group (SGG) with 99.9% owned by SG.
SP is located in Indarung Padang, West Sumatra supplying cement mainly for Sumatra. It also supplies cement for Java and exports part of its production mainly to other Asian countries. SP has six cement packing plants in Padang, Medan, Banda Aceh, Batam, Jakarta and Banten. SP also has 14 buffer warehouses a special cement port in Padang's Teluk Bayur, and in Ciwandan of Banten.
SP produces various types of cement including Ordinary Portland Cement (OPC), Portland Pozzoloan Cement (PPC), Portland Composite Cement (PCC) , Oil well Cement (OC) and Super Masonry Cement (SMC).
In 2011, its production totaled 6.2 million tons or an increase of 8.7% from 5.7 million tons in 2010.
ST located in Pangkep of South Sulawesi has three units of factories producing the types of OPC and PPC. ST is the largest supplier of cement in eastern Indonesia including Sulawesi, Kalimantan, Nusa Tenggara and Maluku, Papua. ST has 8 units of packing plant in Makassar, Bitung, Samarinda, Palu, Banjarmasin, Ambon and Bali and 5 units of buffer warehouse. ST also has cement special port in Biringkassi.
Currently the total production capacity of SGG is 20.6 million tons per year including PT. Semen Gresik (9.7 million tons), PT. Semen Padang (6.3 million tons) and PT. Semen Tonsasa (4.6 million tons).
In 2011, PT. SG set aside US$ 533 million for capital expenditure. The fund has been used to build a new factories in Tuban, East Java and other factories as well as a power plant in Tonsasa, South Sulawesi.
In 2012, PT. SG sets aside Rp5 trillion for capital spending. Around 20% of the fund would be used to finance the construction of a new factory in Sumatra to cost Rp7 trillion to be disbursed in three years of construction. The construction of the new factory will 70% financed with a bank loan.
Cemex shares sold to Blue Valley Pte. Ltd.
A conflict between the government and CEMEX as co-shareholders of PT SG ended with Cemex selling its 24.9 percent stake in SG to the Rajawali Group through its investment vehicle company Blue Valley Pte. Ltd. at a price of US$ 337 million.
The Rajawali Group, which is owned by tycoon Peter Sondakh acquired the stake after the government said it would not use its right to acquire the stake under conditional sale and purchase agreement/CSPA) signed on 17 September 1998.
Under the agreement co shareholder was the first to receive the offer to buy shares for sales.
With the deal, Cemex also agreed to drop its lawsuit filed with an international arbitrage court against the government.
Currently PT. SG is 51.01 percent owned by the government , 24.0% by Blue Valley Hodings Pte and 24.09 percent by the public.
PT Holcim Indonesia Tbk
PT. Holcim Indonesia Tbk (HI) was, formerly known with the name of PT. Semen Cibinong. Holcim acquired 77.33 percent of PT. Semen Cibinong in 2001. Its name was changed on 1 January 2006. HI has two factories -- one in Narogong and another in Cilacap.
Holcim is the world's largest cement producer based in Switzerland. It has stakes in cement factories in 70 countries in the world.
In 2011, HI operated a new factory in Tuban, East Java with a production capacity of 1.7 million tons per year built with an investment of US$ 450 million .
The cement production capacity of HI increased to 8.7 million tons in 2011 from 8.3 million tons in 2010. Its production totaled 7.1 million tons in 2011, and most or 64% of the production is disposed of on the domestic market with 36% for exports.
PT. Indocement Tunggal Prakarsa, Tbk (PT. ITP)
PT. ITP was established in 1985 by the Salim Group. In 2001, Heidelberg Cement Group from Germany acquired the majority 65.14 percent stake through its subsidiary Kimmeridge Enterprise Pte. Ltd. In 2003, Kimmeridge Enterprise Pte. Ltd transferred the shares of PT. ITP to HC Indocement GmbH. In September 2006, HC Indocement GmbH was merged into Heidelberg Cement South-East Asia GmbH which became the owner of PT. ITP.
ITP operates 9 factories in Citeureup, Bogor, the second largest unit of factories in the world, 2 factories in Palimanan, Cirebon, West Java and 1 factory in Tarjun, Kotabaru, South Kalimantan. ITP produces various types of cement including PCC, OPC, OWC and White cement. ITP is the only producer of white cement in the country.
By the end of 2010, the clinker production capacity of the company was 15.6 million tons per year and its cement production capacity was 18.6 million tons per year. The operation of new units of cement mill in Palimanan and Citeureup in 2011, brought the total production capacity of the company to 21.1 million tons per year.
In 2008, Heidelberg Cement AG handed over its entire stake in ITP to Birchwood Omnia Ltd. Therefore, shareholders of IPT now include Birchwood Omnia Ltd (51%), PT. Mekar Perkasa (13.03%) investing public (35.97%).
PT. Lafarge Cement Indonesia
It was formerly named PT. Semen Andalas Indonesia, before it was destroyed by tsunami late 2004. In 2007, a replacement was built for its factory. During the time that it could not produce cement it imported cement from Lafarge unit in Malaysia to supply cement in Aceh and North Sumatra, to maintain its market foothold in northern Sumatra.
In 2010, PT SA resumed operation and its name was changed with PT Lafarge Cement Indonesia.
In 2011 the clinker production capacity of the company was 1.2 million tons/year and cement production capacity was 1.6 million tons/year.
PT Semen Bosowa Maros (PT. SBM)
The factory of the company was built in 1995 and c came on stream in April 1999. PT. SBM is owned by local tycoon Aksa Mahmud.
In 2007, PT. SBM completed the construction of a packing plant in Samarinda, East Kalimantan.
By 2011, the clinker production capacity of the company rose to 1.8 million tons per year from 1.71 million tons per year in the previous year. Its cement production capacity also rose from 1.8 million tons to 3 million tons per year. The production capacity includes those of Semen Bosowa Maros 1.8 million tons and Semen Bosowa Batam 1.2 million tons.
In 2011, the cement production of PT SBM totaled 1.9 million tons. The main market of cement production of PT. BSM is eastern Indonesia .
PT Semen Kupang (PT. SK)
PT. SK is a state company coming on line in 1984 in Kupang, East Nusa Tenggara. In 2011, its clinker production capacity was 300,000 tons per year, and cement production capacity was 570,000 tons per year. PT. SK is wholly owned by the government .
PT. SK has been outdated in technology that it is no longer competitive and efficient . The company then built a new second factory , but it still could not operate efficiently. The company, therefore, was facing financial problem and was forced to stop operation. By the end of 2007, PT. SK resumed operation with financial injection from the state budget of Rp 50 billion. The fund was used as working capital and to buy new spare part for the new factory Semen Kupang II and to pay for coal fuel from Kalimantan. The main market of PT. SK is East Nusa Tenggara.
PT Semen Baturaja (PT. SB)
PT. SB is wholly owned by the government . PT SB is located in Kota Baturaja, South Sumatra having three packing plants in Ogan Komering Ulu (OKU), Tarahan (Lampung), and Kertapati, Palembang.
In 2011, the production capacity of PT. SB was 1.250 million tons of clinker per year and 1.2 million tons of cement per year.
PT. SB produces Portland I with the brand of Semen Tiga Gajah. The basic material is abundantly available in Baturaja. Its main markets are southern Sumatra including South Sumatra, Lampung, Jambi and Bengkulu and Banten in Java.
SB plans to sell 30% of its share through initial public offering (IPO). It hopes to raise Rp1 trillion from the share sales planned in 2013. The fund will be used to build a new factory South Sumatra with a production capacity of 1.5 million tons per year. The new factory is to maintain its market foothold. It hopes to maintain its market share of 29% in the region in 2013. The new factory will need an investment of Rp 2.35 trillion which will include Rp1.3 trillion in loan.
The company also built a new cement mill with a capacity of 300,000 tons per year to cost around Rp 325 billion. The new mill built in its complex in Baturaja came on line in 2011.
Cement factories need large supply of energy in the process of production. Energy makes up 40%-50% of its production cost including for heating and power plant. Currently most cement plants use coal for fuel. Coal consumption in the country, therefore, has increased rapidly. Lately some cement factories begin to use charcoal or husk for fuel.
Coal consumption by cement industry in the country 2011 totaled 7.6 million tons. The consumption is forecast to rise again in the coming years with more cement producers planning expansion of production capacity. In 2010, there were five cement producers coming in line or expanding capacity including PT. Semen Andalas Indonesia, PT Semen Padang, PT Indocement Tunggal Prakarsa Tbk, PT Semen Gresik and PT Semen Tonsasa, which is expanding capacity and building new factory with an investment of US$ 645.6 million to be operational in 2012.
Most of the new factories will be built outside Java . The problem outside Java is shortage in power supply forcing cement factories to build their own power plants to guarantee power supply.
SG for example needed coal for 10 coal-fired power plants with a total capacity of 410 Megawatts (MW) operational in 2011. The power plants are needed to support its plan to expand capacity until 2012. In 2012 the production capacity of SGG will be increased to 23.9 million tons.
SG has established a subsidiary PT SGG Energi Prima to be in charge of coal procurement for its cement factories.
The entire factories of Semen Gresik Group needed 4.2 million tons of coal in 2011. This year the requirement is predicted to rise with the growing number of its factories including new ones in Tuban and Tonasa, Pangkep, South Sulawesi.
In long term the country's cement industry will increase the capacity of its power plants to 200 MW to support capacity expansion by 14.5 million tons, from 44.89 million tons to 59.39 million tons in a 2015.
Indonesia has one of the largest coal reserves in the world that cement producers should not worry about coal supply in the future, but most of the country's coal production have been exported resulti8ng in constraint in coal supply in the country. In 2010, the country's coal production totaled 275.2 million tons, and 188 million tons of which were exported . In 2011 the coal production rose to 290 million tons, but supply on the domestic market was still short of requirement.
PRODUCTION OF CEMENT TOTALED 45.2 MILLION TONS IN 2011
The country's cement production has continued to increase - reaching 45.2 million tons in 2011, up from 39.5 million tons in the previous year or an increase of 14.4%.
The global crisis since late 2008, resulted in weak demand for cement in export market. Indonesia has exported cement to Srilanka, Bangladesh, Maroco, Madagascar and Middle East. Indonesian producers compete sharply in international market such as with Thai producers.
In 2012, the country's cement production is forecast to reach 60 million tons with additional production from a number of new factories.........