Displaying items by tag: Indonesia
Indonesia: Semen Indonesia has decided to continue to develop its new factory in Rembang, Central Java following protests by some local residents. Semen Indonesia's CEO Suparni said that the construction is currently 60% complete, with production expected by October 2016.
Suparni admitted that the development of the factory has been opposed by some of the local residents. Residents of North Kendeng, experts and academics have criticized the development of the factory. Untung Sudadi, a geologist from the Bogor Institute of Agriculture said that the North Kendeng area, where part of the factory will be built, is a karst area, which collects water for local residents and can be susceptible to sinkhole formation and instability.
Similar to an underground basin, karst areas function as water catchment areas. "Karst is essential to maintain water supply," said Untung. He added that conducting mining activities in karst areas would cause environmental damage.
Suparni said that the Environmental Impact Assessment (EIA) for the cement factory has been completed. He also said that the presence of the factory would not disturb water supplies to the local society.
Indonesia: PT Holcim Indonesia Tbk has launched its new US$800m, 3.4Mt/yr cement plant in Tuban, East Java.
Having started the construction five years ago, the plant is Holcim's first greenfield project in Indonesia. The plant will serve the East Java market and supply Sumatra and Kalimantan. With the new plant, Holcim Indonesia's cement production capacity has grown by 40% to 12.5Mt/yr.
"Currently, Holcim Indonesia is operating in an oversupply market and market slowdown. However, we believe that it is temporary as construction markets in developing countries are cyclical. The overall long-term macroeconomic fundamentals in Indonesia remain strong and the domestic economy will recover with the realisation of delayed infrastructure projects and housing," said Gary Schutz, CEO of Holcim Indonesia. "The new Tuban Plant completes our presence in Java as it will serves our markets better, ensures supplies and secures our position among the three biggest cement players in Indonesia."
Indonesia: LafargeHolcim has completed its Tuban project in Indonesia with the official opening of the second kiln line at the cement plant. The new plant, part of LafargeHolcim's subsidiary Holcim Indonesia, will allow the group to tap into key developing markets in Indonesia's East Java Province. LafargeHolcim says that the plant's coastal location and jetty provides it with the flexibility to ship products to other important inter-island markets including Sumatra, Kalimantan and Sulawesi.
With the completion of the project, the construction of which was launched in 2011, LafargeHolcim says that it will be able to 'leverage its new footprint and asset base in Indonesia and in future thrive in a low investment environment.'
LafargeHolcim states that the Tuban facility is a state-of-the-art plant, which allows for the highly-efficient production of cement and better distribution. The plant has an annual cement capacity of 3.4Mt/yr and is located in Eastern Java around 200km from the city of Surabaya. The cement mill of the first line was put into commercial operation in December 2013 and the kiln followed in September 2014.
Indonesia: PT Semen Tonasa's Unit IV cement plant in Biring Ere, Bungoro, Pangkejene Islands, South Sulawesi remains in normal operation despite the damage done by a fire on 19 August 2015. The fire lasted for two hours.
One employee was killed and 10 others were injured in the fire that broke out at the coal mill transport belt. The fire was believed to have been sparked in the coal by friction. Most of the injured suffered burns and wounds after leaping from a height. They are currently getting treatment at hospitals in Makassar and Pangkep. The deceased, identified only as Akbar, 25, of Pangkep, was buried on 20 September 2015.
PT Semen Tonasa managing director Unggul Attas confirmed that the fire did not affect operations at the plant. "The plant remains operating like usual and production is stable," said Unggul.
Indonesia: PT Bhumiadya Indonesia, part of the Sibleco Group and a manufacturer of industrial minerals with 228 sites worldwide, has ordered a coal mill from Loesche for its new limestone plant in Bandung, Indonesia. The LM 17.20 D vertical roller mill grind 10t/hr of coal to a fineness of 10% R 90μm. The scope of supply also includes filters, blowers, a Loesche hot gas generator and inertisation flaps. The delivery of the mill key parts is scheduled to take place at the end of 2015.
Indonesia: Holcim Indonesia and Lafarge Cement Indonesia have sped up their merger process, slated to finish by the end of 2015, in a bid to increase the companies' market shares. The companies have remained under different management and targeted separate market segments despite the merger of their parent companies.
"We hope to finish the merger process by the end of 2015. As Holcim is listed on the bourse, we are still waiting for the permit from Bapepam (Capital Market Supervisory Agency) and KPPU (Business Competition Supervisory Commission)," said Holcim vice president of sales Juhans Suryantan.
The speedy merger process is part of Holcim's efforts to expand its share of the Indonesian cement market, which stood at 15% before the merger, after Semen Indonesia with 43.7% and PT Indocement Tunggal Prakarsa with 30%. Meanwhile, Lafarge Indonesia had a 3% market share, placing it in fifth place.
Juhans added that both product brands would stay separate after the merger. "We have not decided on the brands. We might still use our own brands for the next one or two years," he said. The brands are deemed not to overlap due to the different target markets of both companies, as Holcim has a stronger grip on Java and southern Sumatra, while Lafarge Indonesia was stronger in Aceh and northern Sumatra.
Take a moment to spy on the Citeureup cement plant in Indonesia. It's gargantuan! The Indocement site is one of the largest cement factories on the world. It has nine production lines with a cement production capacity of 11.9Mt/yr.
The news this week that Indocement intends to stop production at three cement production lines at its Citeureup plant strikes an uncertain tone. The decision underpins the impression of a readjusting Indonesian cement market despite the HeidelbergCement subsidiary saying that the capacity will be replaced by a new 4.4Mt/yr line at the site at the end of 2015. Temporarily reducing production capacity by 35% may not seem much on a industrial site that can produce more cement than many countries! However, a single factory this massive is likely to be particularly vulnerable to market changes.
Zooming out to the national picture, Indocement reported that its revenue dropped by 6.6% year-on-year for the first half of 2015. Domestic sales volumes of cement fell by 8.1% as domestic cement consumption in the country generally fell by 4.2%. The cement producer blamed the falls on economic stagnation and delayed government spending on infrastructure projects.
In its outlook Indocement lamented the loss of subsidies on electricity and fuels in Indonesia. Back in 2014 the government raised electric prices via a tariff under the previous administration before lowering them slightly. Then the new government raised fuel prices in November 2014 by removing subsidies with the intention of siphoning the savings to infrastructure spending. At the time a Semen Indonesia representative told the Jarkata Post that he expected cement sales to rise by 6% in 2015. This estimate had already followed a downward adjustment of predicted sales in 2014 due to familiar sounding delays in infrastructure projects (due to an election year) and a slowing economy.
In addition to this the government also imposed price cuts on cement on state-run producers in January 2015. Semen Indonesia then saw its domestic sales volumes fall by 5.3% in January – May 2015 to 9.91Mt. Subsequently Semen Indonesia saw its net profit drop by 21% year-on-year to US$163m for the first half of 2015. Around a month before its mid-year results it reported to local media that it was concentrating on exports in 2015. Reported exports have risen by over 700% to 0.18Mt in January – May 2015. Other producers such as LafargeHolcim have also reported 'challenging' market conditions. Nationally, cement demand dropped by 3.8% year-on-year to 22.9Mt for the first five months of 2015 according to Indonesian Cement Association data. This was the biggest fall since 2009.
All in all it sounds like the good times may be gone for the Indonesian cement industry, at least for now. The local economy as a whole is in a recession following two consecutive quarters of declining growth in gross domestic product (GDP). Yet cement producers are still forlornly hoping for infrastructure spending to kick in. Throw in worries about the effects of a US interest rate rise on Indonesian borrowing and the situation is looking dicey. Indocement's Citeureup complex may seem even more outsized in a year's time.
UPDATE: A reader has pointed out that we linked the aerial photo at the start of this article to the smaller of the two cement plants in the area. This has now been changed. Note the trucks queuing to enter the plant.
Indonesia: Cement sales for the first seven months of 2015 have continued to decrease. Weak demand, in addition to the Eid al-Fitr holiday period, caused national cement sales for July 2015 to fall by 4.2% year-on-year to 31.3Mt.
Regions with the largest cement consumption drop for July 2015 were Bali and Nusa Tenggara, which saw a 26.5% drop to to 214,540t, Kalimantan with a drop of 23.6% to 208,939t, Java with a 13.9% decrease to 1.79Mt and Sumatra with a drop of 3.3% to 726,000t.
Widodo Santoso, chairperson of the Indonesian Cement Association, is optimistic that cement sales and consumption will increase in the second half of 2015 as the government starts actualising its budget to boost the infrastructure sector. Santoso said that the cement industry would gain 11Mt/yr of additional production capacity from the operation of four new plants from Semen Bosowa, Holcim Indonesia, Semen Merah Putih, Semen Jawa and Semen Conch. The additional cement supply and weakening of cement demand may cause oversupply in the cement industry and create higher competition.
Meanwhile, Semen Indonesia has revised its domestic cement sales growth target to 0% from the initial target of 5%, in line with weak demand in the cement market in the first half of 2015. Agung Wiharto, corporate secretary of Semen Indonesia, said that unsupportive macroeconomic conditions, depreciation of the Indonesian Rupiah and the weakening of commodity prices affected the company's sales for the first semester. Its sales volume for the first half of 2015 decreased by 4.2% year-on-year.
"Semen Indonesia's sales volume in several regions was affected by tight competition with new players and new plants," said Wiharto. He added that he expects the domestic cement market to improve in the third quarter of 2015, in line with actual infrastructure developments to boost cement demand in the private and retail sectors. "Cement sales are expected to again grow by 6 - 8% in 2016 if infrastructure developments continue." Semen Indonesia plans to resume several cement plant expansion projects in Rembang and Padang to meet cement demand growth in the future. The plants in Rembang and Padang will each have capacities of 3Mt/yr.
Indonesia: Indocement Tunggal Prakarsa plans to discontinue production at its P1, P2, and P6 cement plants in Citeureup, West Java to improve efficiency and maintain margin stability amid weak demand in the cement industry.
"We seek to stabilise margins in 2015 by shutting down plants that are not efficient, including plants P1, P2 and P6 in Citeureup," said Christian Kartawijaya, president director of Indocement. He said that operations in plants P1, P2, and P6 were no longer efficient and that they were usually only used as backup when another plant was on maintenance. The lost production from the closure of the three plants will soon be replaced by production from the new 4.4Mt/yr capacity P14 plant, which is due for completion by the end of 2015.
Indocement also plans to reduce fixed costs and to postpone some of its non-urgent projects and expansions, including cutting down 2015's capital expenditure to maintain its performance. "We plan to decrease our 2015 capital expenditure to US$258m, as demand for cement has not risen amid a cement supply hike. Therefore, we will try to postpone our investments," said Kartawijaya. He added that the purchase of stone reserves and the investment in a new cement plant in Pati, Central Java will be postponed.
Indocement's revenues for the first six months of 2015 dropped by 6.6% year-on-year to US$654m due to an 8.8% decline of domestic sales to 8.2Mt. Its market share also shrank to 29.1% from 30.5% in 2014 due to weak domestic consumption, tight competition and oversupply in the national market. The decline in revenue and sales volume also resulted in 4.7% lower earnings (US$226m) before interest, taxes, depreciation and amortisation (EBITDA) and an 8.4% lower net profit at US$169m for the first half of 2015.
Indonesia: PT Semen Indonesia has posted a sharp drop in net profit to US$163m for the first half of 2015, according to Reuters. In the corresponding period of 2014, its net profit was US$207m.