State Development and Investment Corporation (SDIC), China’s largest state-owned investment holding company, is looking into setting up a cement plant in Manokwari, West Papua, with an anticipated investment of US$200 million, an official says.
SDIC is currently conducting a feasibility study for the plant, which it expects to begin building in 2013 and complete in 2014, Industry Ministry upstream chemical industry director Tony Tanduk told The Jakarta Post on Wednesday.
“The firm has already found the source of raw materials — limestone and clay, but is still looking for a source of energy, since it will require quite a lot of coals to support its production activities,” Tony said.
The firm also asked the government to help provide infrastructure, including a port, since this would allow it to distribute cement to surrounding areas such as Maluku and Papua New Guinea.
Tony said that once operational the plant would produce around 1 million tons of cement a year. The output could help reduce the cement prices in the area by around 30 percent, he added.
Currently, cement prices in Papua, Indonesia’s eastern-most province, are among the highest in Indonesia, since it must be imported from other islands.
According to the Indonesian Cement Association (ASI), the annual cement demand in Papua and West Papua provinces amounts to around 511,000 tons.
Two other Chinese firms have also announced plans to build cement plants in Indonesia.
In June, Anhui Conch Cement Company Ltd. pledged to invest a total of $2.35 billion to build four cement plants in East Kalimantan, West Kalimantan, South Kalimantan and West Papua.
Meanwhile, China Triumph International Engineering Co. Ltd. (CTIEC), through its China National Building Materials Group unit, would team up with PT Semen Grobogan to build a cement plant with a production capacity of up to 2 million tons annually in Grobogan, Central Java, at an estimated cost of $350 million.
The construction sector, which grew 6.4 percent in the first nine months of this year, contributing 0.4 percent to the growth in Indonesia’s gross domestic product, which grew 6.5 percent year-on-year, increased demand for cement.
This surging domestic demand has attracted a number of global cement producers, including the world’s largest cement producer, France’s Lafarge SA, to pour investments in Indonesia.
The ministry estimates that domestic cement use will expand by between 7 and 10 percent annually, and expects demand to hit 55 million tons by 2015 and break the 100-million-ton mark in 2020.