The legally binding sales and purchase agreement worth US$917 million was signed by PT Semen Indonesia Industri Bangunan, which is a subsidiary of Semen Indonesia, on December 11, 2018.
"We are grateful to be able to announce the transformational share takeover transaction for the Semen Indonesia Group to be able to maintain its position as a leading producer in Indonesia," President Director of Semen Indonesia Hendi Prio Santoso revealed.
Taking into account the increasingly competitive scenario in the national cement industry, the collaboration between Semen Indonesia and Holcim Indonesia will create a bigger and stronger footprint.
Holcim Indonesia is the third-largest cement producer company in Indonesia, with four plants having an annual capacity of 14.8 million tons and 30 ready-mix facilities.
The acquisition of Holcim Indonesia`s shares is viewed to help further strengthen Semen Indonesia`s position in the domestic market.
Of the annual capacity of 53 million tons of cement, the Semen Indonesia Group produces 38.2 million tons, while Holcim manufactures 14.8 million tons per year, both being the leaders in cement production in Southeast Asia.
With the Conditional Sales and Purchase Agreement, Semen Indonesia will expand its domestic network; increase product diversification; and boost efficiency, especially distribution in costs and raw materials use, while strengthening its business position with a variety of products.
Semen Indonesia also provides solutions that can increase the added value of products for stakeholders.
Holcim Indonesia has also applied waste to fuel technology that can later be synergized widely in facilities of the Semen Indonesia Group. This will improve cost efficiency.
Indonesia`s cement industry is still promising and has a prospective growth rate, as it is supported by the continuation of public and private investment programs, such as the One Million Houses Program, infrastructure projects, property projects developed by the private sectors, and retail consumption.
This takeover of shares will provide additional capacity and a wider geographical range for the Semen Indonesia Group to seize opportunities in the domestic cement industry. The business scheme also strengthens the resilience of the state-owned cement industry in Indonesia.
Earlier, Sigit Wahono, temporary head of the Semen Indonesia Communication Department, had noted that the acquisition of shares will strengthen the company`s sales and production networks.
The acquisition will also enhance product diversification for customers and offer better opportunities for employees, suppliers, partners, and corporate stakeholders.
"In addition to making Semen Indonesia Group the largest cement producer company in Southeast Asia, with a capacity of 53 million tons per year, this transaction is also one of the contributions of SOEs in increasing the resilience of the national cement industry that will support sustainable development in the country," Wahono stated.
Currently, 15 cement companies are operating in Indonesia, with an installed capacity of some 107 million tons per year, of which 63 percent of the share capacity is controlled by private parties and global foreign players.
Data obtained from the Indonesian Cement Association in 2017 indicated that the demand for cement in the country reached 54.2 million tons.
Until October 2018, the demand for cement reached 56.5 million tons, or grew 5.1 percent.
According to Wahono, the Semen Indonesia Group seeks to expand its export market. The Semen Indonesia Group had only exported 860,060 tons in 2017. As of October 2018, it increased to 2.3 million tons, comprising 1.25 million tons of cement and 1.1 million tons of semi-finished cement.
On the other hand, the South Asian market, especially Bangladesh and Sri Lanka, had absorbed 3.2 million tons of cement of the Semen Indonesia Group, of which 2.5 million tons were directly exported from the Semen Indonesia Group factory in Indonesia and 0.7 million tons were supplied from the Semen Indonesia subsidiary in Vietnam.
"SI Group`s exports are only 10 percent of the total sales. Hence, we are striving to increase the export market. South Asia is a promising market, as many global players are receding," Wahono remarked.
Kalimantan
The highest consumption of cement in Indonesia is in Java. In 2017, cement consumption was recorded at 30.7 million tons, and as of October 2018, it increased by 4.4 percent to 32.055 million tons.
On the other hand, PT. Semen Indonesia (Persero) Tbk recorded positive growth in cement sales in Kalimantan during the January-November 2018 period, with an increase of some four percent.
According to Sigit Wahono, the temporary head of the Semen Indonesia Communication Department, total sales of 1,662,660 tons were recorded in the Kalimantan region for 11 months in 2018. Meanwhile, the total sales in Kalimantan region in 2017 reached 1,553,857 tons.
Of the total sales, the highest consumption was from East Kalimantan Province, with 520,696 tons; followed by Central Kalimantan, with 365,617 tons; West Kalimantan, 317,798 tons; South Kalimantan, 305,462 tons; and North Kalimantan, 113,086 tons.
"Sales in East Kalimantan, Central Kalimantan, and South Kalimantan grow positively, while sales in West Kalimantan and North Kalimantan are declining," Wahono stated.
Kalimantan is an important market for PT Semen Indonesia, as there are several infrastructure projects on the island.
In East Kalimantan Province, there is the some 99-kilometer-long Balikpapan-Samarinda toll road construction project, using concrete.
In Kalimantan, PT Semen Indonesia has two packing plants in Banjarmasin, South Kalimantan, and Balikpapan, East Kalimantan.
The cement packaging factories aim to accelerate sales distribution while strengthening the market, Wahono noted.
He added that to date, the management of PT Semen Indonesia is still reviewing plans to increase its production capacity.
Meanwhile, Head of the Packing Plant in Banjarmasin Silvester Tangketasik pointed out that the packing plant had a daily production capacity of some 1,200 tons, with a capacity of silo (bulk cement storage) of six thousand tons.
"In addition to serving the market in South Kalimantan, we also send packed-cement products to Central Kalimantan. Currently, Semen Indonesia`s market share in South Kalimantan is some 25.6 percent," he noted.
Wahyu Ramli, one of the distributors of Semen Indonesia`s products in Banjarmasin, added that products by the state-owned company are still in demand by consumers in South Kalimantan, although there are several other cement products in the market.
"Although the price is slightly more expensive, consumers, who understand quality, will definitely choose Semen Indonesia`s products, including for government projects," he noted.
The Packing Plant in Banjarmasin packs two cement brands under the Semen Indonesia Group family, specifically, Semen Gresik (SG) and Semen Tonasa. The bulk cement for SG is supplied from the SG plant in Tuban, East Java, while Semen Tonasa is supplied from a factory in South Sulawesi.
SG products dominate the retail market, while Semen Tonasa is favored by government and private development project managers.
Reporting by Chandra HN, Libertina W Ambari
Editing by Bustanuddin
Reporter: Antara
Editor: Yosep Hariyadi
Copyright © ANTARA 2018
