Displaying items by tag: Indonesia
Indonesia: Semen Indonesia has prepared US$449m to be spent on capital expansion upgrades in 2017 to support government infrastructure targets. The plan includes four cement plants with a total production capacity of 10.5Mt/yr, according to the Jakarta Post. The Rembang plant in Central Java and the Indarung VI plant in Padang, West Sumatra are in the final stages of construction. New plants in Aceh and Kupang are also being planned for completion in 2019 and 2020 respectively, although these projects will require additional funding. The cement producer is also planning to build two packaging plants in Bengkulu and Maluku and a 30MW waste heat power plant at its plant in Tuban, East Java.
Company corporate secretary Agung Wiharto added that Semen Indonesia has forecast a 5% rise in demand for cement in 2017 to 70Mt. This is mainly due to government plans to boost infrastructure development across the country.
Indonesia: Ganjar Pranowo, the governor of Central Java, is willing to shut down Semen Indonesia’s Rembang cement plant if the central government approves it. Ganjar made a statement in response to a protest staged by Rembang residents against the cement plant following a Supreme Court ruling in favour of the residents, according to Tempo magazine. He added that he has sought advice from the government including the presidential office, the Environmental Affairs Ministry and the Ministry of State Owned Enterprises. Ganjar has established a team to conduct a study and he has until 17 January 2017 to respond to the ruling.
Indonesia: Bosowa Corporation has started operation at a 1.8Mt/yr cement grinding plant in Banyuwangi, East Java. The plant cost US$60m, according to the Jakarta Post. It will add to the 5.4Mt/yr of cement that Bosowa produces at its two plants on South Sulawesi and Riau Islands.
World: Workers at LafargeHolcim are holding a ‘global day of action’ in advance of International Human Rights Day on 10 December 2016 to draw attention to the world’s largest cement maker’s alleged widespread violations of workers’ rights, according to the IndustriAll Global Union federation. Workers in Europe, Africa, Asia and the Americas will ‘mobilise, take actions and demand’ that LafargeHolcim respect workers’ rights.
The union action intends to highlight alleged worker rights violations including an increase in workplace fatalities in 2015, an increasing use of precarious employment, illegal replacement of striking workers in Canada, use of child labour and targeting of union members for dismissal in Uganda, unfair treatment of displaced families due to the development of a plant in Ambuja in India and a ‘poor’ response to workplace accidents in Indonesia.
Unions in the federation are demanding that LafargeHolcim use less precarious work, cooperate better with trade unions on health and safety and restructuring, and enter into ‘meaningful’ negotiations with them about the future of labour relations and social dialogue.
“We expect that the world number one in the cement sector is not only number one in figures and cement sales, but also in labour standards and workers’ rights,” said general secretary of the European Federation of Building and Woodworkers (EFBWW) Sam Hägglund.
Holcim Indonesia inaugurated a new cement terminal in Lampung last week. Unfortunately, the spectre of industry overcapacity haunts the country at present and the subsidiary of LafargeHolcim may be late to the party. The Indonesian Cement Association (ASI) has been publicly warning the government of overcapacity since the end of the summer. Its first line of action has been to lobby for restrictions on producer permits to slow the growth of new plants.
ASI figures show that cement sales in September 2016 fell by 3.3% to 5.64Mt compared to August 2016 due to lower residential sector demand. Domestic cement sales rose by 2.95% year-on-year to 44.7Mt in the first nine months of 2016 and the ASI expects sales growth of 3 – 4% for 2016 overall. Yet, the risk of overcapacity is stark. Cement production capacity has nearly doubled from 59.3Mt/yr in 2012 to 92.7Mt/yr in 2016 but demand is projected to only reach 65Mt in 2016, leaving a production oversupply of 27.7Mt. Regional consumption has fallen in Jakarta, Banten and West Java, particularly in the first two. Elsewhere, it has grown, particularly in Central Java, as well as Yogyakarta and East Java to a lesser extent.
Initial Global Cement Directory 2017 research places active production capacity at 66.3Mt/yr suggesting that the ASI may be exaggerating the risk of overcapacity. The additional c30Mt/yr capacity arises from plants that have been proposed, that are actually under construction or that have been mothballed. However, the ASI data should be more accurate as it represents the local producers. Either way, capacity is growing faster than consumption as can be seen in graph 1.
Graph 1: Cement consumption and production capacity in Indonesia, 2012 – 2016. Source: Indonesian Cement Association, Global Cement Directory 2012 – 2017.
Semen Indonesia, the country’s largest producer, reported that its revenue fell very slightly to US$1.4bn in the first nine months of 2016 and its net profit fell by 8.4% to US$215m. It blamed this on a fall in sales volumes and prices due to rising competition. The other large producers have said similar in the past. Indocement, the country’s second largest producer after Semen Indonesia, saw its revenue fall by 11.9% to US$837m in the first nine months of 2016 and its profit fell by 2.2% to US$231m. LafargeHolcim described the market as affected by overcapacity and ‘a difficult competitive environment.’
Back in May 2016 a feature on the predicament facing the Indonesian cement industry in the Jakarta Post suggested that producers were building new capacity despite the risks of overcapacity to win market share. Cement producers are about to find out whether this will work or not. Meanwhile it seems unlikely that the measures the ASI is suggesting will do much to alleviate the looming crisis. Still, on the positive side, it’s looking like a good time to buy cement as a consumer.
For more information about the cement industry in Indonesia view the first part of the Association of South East Asian Nations (ASEAN) feature in the October 2016 issue of Global Cement Magazine
Indonesia: Holcim Indonesia has officially inaugurated its new 1Mt/yr cement terminal in South Lampung. The event was attended by the Vice Regent of South Lampung Regency, Nanang Hermanto, the representatives of the Ministry of Industry and the Board of Directors of Holcim Indonesia. The US$26m project was started in 2014 and it will process bagged and bulk cement. It is intended to serve markets in Sumatera Island, especially in Lampung.
“We want to get closer to our customers and ensure secure supply to meet local demand in Lampung. This terminal applies the latest technology and environmental-friendly equipment and a jetty to support the operation,” said Gary Schutz, President Director of Holcim Indonesia.
Schutz also addressed the country’s economic slowdown and decreasing demand for cement by calling for the government to invest in delayed infrastructure projects. He said that numerous additions to the national cement production capacity has led to a ‘drastically’ over-supplied market outpacing demand by far for the next six to 10 years.
Indonesia: The Indonesian Cement Association (ASI) has reported that cement sales in September 2016 fell by 3.3% to 5.64Mt compared to August 2016. It blamed the decline on lower demand from the local housing industry. Cement sales fell sharply in Java, Sumatra and Kalimantan, while eastern parts of Indonesia, including Sulawesi, Maluku and Papua, saw an increase in sales, according to the Jakarta Globe.
"Weakening sales may be due to the lower demand from houses and apartments. Demand from infrastructure projects has been picking up since the second quarter of 2016, but still can't make up for the lack of demand from the property sector," said ASI chairman Widodo Santoso.
National cement sales rose by 2.95% year-on-year to 44.7Mt in the first nine months of 2016 and the ASI expects sales growth of 3 – 4% for 2016. However, cement producers fear that this growth rate will be insufficient to sustain investments in new cement plants. The ASI says that cement production in Indonesia has exceeded demand by more than 30%.
Indonesia: Industry Minister Airlangga Hartarto has said that the government is preparing regulations to restrict new cement plant permits being issued in a bid to maintain stable cement prices. The ministry’s director general for chemicals, textile and miscellaneous industry, Achmad Sigit Dwiwahjono, has also confirmed the proposed regulation, according to the Jakarta Post. Airlangga added that his ministry has also been considering other measures to tackle cement oversupply.
The Indonesian Cement Association (ASI) has lobbied the government to take action on oversupply. Cement production capacity has nearly doubled from 59.3Mt/yr in 2012 to 92.7Mt/yr in 2016. However, demand is projected to only reach 65Mt in 2016, leaving a production oversupply of 27.7Mt.
Indonesia: Cemengal has completed the commissioning period for Cemindo in Medan. Two Plug&Grind XL units are operational at the site, allowing the cement producer to sell nearly 0.5Mt/yr of cement. A third unit is also due to start work in the country in the next few months.
Indonesia: The Indonesia Cement Association (ASI) has urged the government to restrict the issuance of new licenses as the country's cement industry has been experiencing oversupply. Widodo Santoso, chairman of the ASI, told an industry seminar that there are 13 cement producers in the country with total production capacity of 92Mt/yr but that local demand is only reaching 63 – 65Mt/yr, according to Cogencis.
"The government should restrict investment in cement industry by leading the new cement investment to outside Java where there is no cement industry," said Santoso said.
Santoso added that 10 cement plants opened in 2015 and that four more are set to start operation in 2016. By 2017 the country’s cement production capacity may surpass 100Mt/yr. He recommended that local producers increase their exports. The ASI estimates that exports will increase to 2Mt/yr in 2016 from 0.5Mt/yr in 2015. Countries such as Bangladesh, Sri Lanka, Australia, African countries, and West Asian countries are among the destinations.