Semen Indonesia Taking Steps to Anticipate Power Rate Hikes

Jakarta (Antara) - State-owned cement producer PT Semen Indonesia is optimistic about its anticipatory steps to face the electricity tariff increases, fuel subsidy reduction and increase in labor wages in 2014. "We took anticipatory steps with efficiency in a number of business departments, so that the company's performance will not be affected and remain positive," Semen Indonesia president director Dwi Soetjipto said in a discussion on "Investor Day" here on Wednesday. He stated that his company will make innovations that will improve efficiency, including assuring that energy needs are met by signing a long-term contract for coal and coal-field management through its subsidiary PT SGG Energi Prima. "Each of our new factories will be completed with a power plant, so that it can be efficient and can stave off energy cost," Dwi asserted. The Tonasa V factory in South Sulawesi for example is equipped with a 2x35 MW capacity power plant, the largest one it has ever built and is integrated with the cement industry, he noted. Dwi explained that the prospect for cement will continue to be bright, so the cement industry will continue to grow. With the assumption that growth will reach six percent per annum, the cement consumption will rise to 73.55 million tons in 2017 as compared to 58 million tons in 2013. "If factory capacity is not increased, we fear there will be a shortage of cement supply in the future and will hamper development. Given this prospect, the cement industry takes a strategic position. And the company is taking anticipatory steps in the face of this opportunity," Dwi affirmed. As for increasing the capacity, the company will increase capacity in existing plants and develop new ones. "Now the company is developing new plants in Central Java and West Sumatra, with a respective capacity of three million tons," Dwi pointed out. With this strategy, the company is targeting a production of 40.8 million tons in 2017, he added. Until the first quarter of 2014, PT Semen Indonesia controlled 43.8 percent of the national market share with sales of 6.2 million tons, up 3.5 percent from the same period a year earlier, when it was 5.9 million tons. During the first quarter, Semen Indonesia posted an income of Rp6.2 trillion, up 11.4 percent. The company's net profit was Rp1.3 trillion or an increase of 5.3 percent as compared to that in 2012, when it was Rp1.2 trillion. (*)