State-controlled Semen Indonesia, the country’s biggest cement manufacturer, is putting aside $500 million in capital expenditure next year, anticipating the revival of the government’s infrastructure projects.
The 2015 capital spending plan — which is 25 percent higher than this year’s amount — will be used to build or upgrade cement plants and to improve Semen Indonesia’s distribution network, president director Dwi Soetjipto said.
Dwi added that Semen Indonesia aims to produce up to 40 million metric tons of cement by 2017, foreseeing a jump in cement demand between 2014 and 2019 from infrastructure projects with the country’s new administration.
Concerns over the political outcome led to delays in construction projects across the nation which weakened the demand for cement negatively effected the industry in the first half of the year.
However, the market is expected to pick up in the remainder of the year once political stability sets in.
According to Dwi, funds for next year’s capital expenditure will come from both internal and external sources, including a loan from Bank Mandiri.
In June, Bank Mandiri, Standard Chartered and Japan’s Sumitomo Mitsui Banking Corporation approved a $100 million syndicated loan to Thang Long Cement, Semen Indonesia’s unit in Vietnam.