SCG Indonesia, the local unit of Thailand’s biggest cement manufacturer, Siam Cement, is set to launch operations on its first cement plant in Indonesia during the third quarter of the year amid an anticipated construction boom.
The $356 million cement plant — which is planned for Sukabumi, West Java — is slated to produce as much as 1.8 million metric tons of cement annually, SCG Indonesia country director Nantapong Chantrakul told reporters in Jakarta on Tuesday.
The plant’s products, all of which will be sold locally, will enable SCG Indonesia’s cement operations to sustain itself without imported products from Thailand.
“More than 80 percent of the machines have arrived and ready to be installed. We hope to finish the installation on time,” Chantrakul said.
The new plant is expected to lift SCG Indonesia’s revenue in cement and building materials — which makes up roughly 80 percent of its total revenue — by between 25 percent and 30 percent this year, the country director said.
The company saw Rp 5 billion ($384,000) in revenue last year, up 4 percent from the year before, booking approximately Rp 14.7 billion in total assets, according to its country director.
Chantrakul noted the oversupply of cement — which lagged growth for the industry last year — is likely to continue this year, especially as most cement makers will be finishing their expansion plans this year.
“[But] we still think that the government policy to stress on building infrastructure will be one of the key drivers that will help the cement industry,” he added.
He also said that the company will focus on offering premium quality cement products to gain a competitive advantage.
Cement sales growth in Indonesia slowed to 3.3 percent, 59.9 million metric tons last year, according to data from the Indonesia Cement Association. This compared to the 5.5 percent increase in 2013.
Aside from cement, SGC Indonesia operates two additional business units in petrochemicals and paper packaging.
The firm acquired Indoris Printingdo, a paper packaging company, for $10 million last December. Indoris Printingdo produces up to 8,000 tons of paper annually. SCG Indonesia also owns a 30 percent stake of a joint venture in Cilegon, Banten, that produces olefin, a fiber used to make clothing apparel and automotive fabrics, with local petrochemical firm Chandra Asri.
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