Cementing Myanmar

Cementing Myanmar
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By Parluhutan Situmorang 

State-controlled cement maker Semen Indonesia is preparing to set aside $200 million next year to buy a cement company in Myanmar, part of its plans to expand in Southeast Asia region. “We want to expand in overseas markets and make Semen Indonesia a regional-scale cement enterprise,” president director Dwi Soetjipto said last week in Surabaya. Dwi said that in overseas ventures, Semen Indonesia prefers to acquire other cement companies that already have factories than to build its own from scratch. The state-owned cement company is now reviewing three Myanmar cement makers with a capacity of at least 1 million mettrc tons, one of which it expects to acquire. “We are studying three cement companies that have expressed interest in working together. We are cooperating with the Embassy of Indonesia in Myanmar to obtain in-depth information about these companies,” Dwi said. Semen Indonesia has earmarked $200 million for the acquisition. Dwi said that the company is also seeking external financing, possibly from bank loans or a bond sale. “[Further] external funding this year may not go through, because the acquisition of the Myanmar factory will be completed next year,” Dwi said, adding that the company will have its loan disbursed or bonds issued after the Myanmar acquisition is certain. Acquiring a cement company in Myanmar could raise Semen Indonesia’s production capacity to 26 million tons a year from its current 25 million tons per year, the largest in the country. “The factory in Myanmar would supply the export market, which is not being met due to the high demand for cement domestically,” he said. The prospect of purchasing a Myanmar plant marks the largest cement maker in Indonesia’s latest foray into regional expansion. Last year, the Semen Indonesia acquired a 70 percent stake in Thang Long Cement, a Vietnam-based cement manufacturer, for $157 million. The company may withhold acquisition of cement companies in Thailand and the Philippines as capacity in the two countries are already excessive, Dwi said. Domestically, Dwi said, Semen Indonesia aims to complete construction of the plant in Rembang, Central Java and Indarung VI in West Sumatra no later than 2016. Total investment value for the two plants is Rp 7 trillion ($716 million), drawn from Semen Indonesia’s internal cash and bank loans. The company is currently seeking an export credit agency loan of $300 million to $400 million for the two plants. “The company has sent loan proposals to several ECAs based in Europe. A European ECA is preferred, since the factory’s machines will be imported from the region,” Agung Wiharto, Semen Indonesia’s corporate secretary, said. (The Jakarta Globe)

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